As filed, via EDGAR, with the Securities and Exchange Commission
on July __, 1996
File No.: 333-05091
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|X| Pre-Effective Amendment No. 1
|_| Post-Effective Amendment No. __
(check appropriate box or boxes)
-------------------
AETNA SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
800 238-6263
(Area Code and Telephone Number)
151 Farmington Avenue, Hartford, Connecticut 06156-8962
(Address of Principal Executive Office) (Zip Code)
-------------------
SUSAN E. BRYANT, ESQ.
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
RE4C
Hartford, Connecticut 06156-8962
(Name and address of agent for service)
Copy to:
JAY G. BARIS, ESQ.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
-------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940; accordingly, no fee is payable herewith. A Rule 24f-2 Notice for
Registrant's most recent fiscal year ended October 31, 1995 was filed with the
Commission on December 29, 1995.
<PAGE>
ASIAN GROWTH FUND
A SERIES OF
AETNA SERIES FUND, INC.
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-14
PART A
N-14
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1. Beginning of Registration Statement Cross Reference Sheet;
and Outside Front Cover Page of Front Cover Page.
Prospectus
2. Beginning and Outside Back Cover
Page of Prospectus Back Cover Page.
3. Fee Table, Synopsis Synopsis; Risk Factors;
Information and Risk Factors Comparison of Fees and
Expenses.
4. Information About the Transaction Reasons for the
Transaction; Synopsis;
Information about the
Transaction.
5. Information About the Registrant Synopsis; Comparison of
the Portfolios'
Investment Objectives
and Policies;
Information about the
Portfolios; Additional
Information.
6. Information About the Company Synopsis; Comparison of
Being Acquired the Portfolios'
Investment Objectives
and Policies;
Information about the
Portfolios; Additional
Information.
7. Voting Information Information Relating to
Voting Matters.
8. Interest of Certain Persons and Inapplicable.
Experts
9. Additional Information Required Inapplicable.
for Reoffering by Persons Deemed
to be Underwriters
i
<PAGE>
PART B
N-14 STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- -------- ------------ -------------------
10. Cover Page Cover Page.
11. Table of Contents Cover Page.
12. Additional Information About
the Registrant Statement of Additional
Information of Aetna
Series Fund, Inc. dated
March 1, 1996.
13. Additional Information About
the Company Being Acquired Inapplicable.
14. Financial Statements Statement of Additional
Information of Aetna
Series Fund, Inc., which
incorporates the audited
annual financial
statements of the Asian
Growth Fund and of the
International Growth
Fund of Aetna Series
Fund Inc., as of October
31, 1995; and the
unaudited financial
statements and pro forma
combined financial
statements of the Asian
Growth Fund and the
International Growth
Fund, Inc., as of April
30, 1996.
PART C
N-14
ITEM NO. ITEM CAPTION PART C CAPTION
- -------- ------------ --------------
15. Indemnification Indemnification.
16. Exhibits Exhibits.
17. Undertakings Undertakings.
ii
<PAGE>
AETNA ASIAN GROWTH FUND
a series of
AETNA SERIES FUND, INC.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
August 12, 1996
TO THE SHAREHOLDERS OF THE AETNA ASIAN GROWTH FUND, A PORTFOLIO OF AETNA SERIES
FUND, INC.:
The accompanying Notice of Meeting and Proxy Statement presents a proposal that
will be considered at a Special Meeting of Shareholders to be held on September
13, 1996 at 9:00 a.m. at 151 Farmington Avenue, Hartford, Connecticut.
The Board of Directors of Aetna Series Fund, Inc. is recommending that the
Fund's Aetna Asian Growth Fund portfolio be reorganized into its Aetna
International Growth Fund portfolio. The Asian Growth Fund has been unable to
achieve sufficient growth of its assets and therefore has been unable to operate
as cost effectively as a larger portfolio. While Aetna has been voluntarily
waiving a portion of its fees, it advised the Board that it would not continue
to waive those fees indefinitely and would terminate the waiver in the near
future.
In reviewing the proposed reorganization, the Board evaluated the risks and
benefits of the reorganization to both the Asian Growth Fund and the
International Growth Fund. The Board considered the fact that the expenses of
the Asian Growth Fund, without the fee waiver, would be higher than those of the
International Growth Fund. In addition, the Board also considered the fact that
both portfolios have similar investment objectives and policies and have
substantially the same service providers, including the dividend disbursing
agent, transfer agent and custodians. The Board considered that a reduction in
total expenses could be realized by shareholders of both the Asian Growth Fund
and the International Growth Fund as a result of the elimination of duplicative
costs.
Further, the Board evaluated the relative risks and performance of the two
portfolios. The Asian Growth Fund, due to its mandatory concentration of
investments within certain Asian countries, has a greater risk exposure than
that of the International Growth Fund which is more diversified. The
International Growth Fund has also had better performance than the Asian Growth
Fund over the life of the portfolios. The Board believes that through
investments in a more geographically diversified international portfolio,
overall risk could be reduced and performance improved.
<PAGE>
Based on all these factors, the Board, on April 30, 1996, voted to recommend to
the shareholders of the Asian Growth Fund that your fund be reorganized into the
International Growth Fund. Shareholders are being asked, as described in the
attached proxy statement, to approve or disapprove a proposal to transfer the
assets of the Asian Growth Fund to the International Growth Fund in exchange for
shares of the International Growth Fund and the subsequent liquidation and
dissolution of the Asian Growth Fund.
If the proposed transaction is approved, each shareholder of the Asian Growth
Fund would receive full and fractional shares of the International Growth Fund
equal in value, at the close of business on the date of the transfer, to the net
asset value of the shareholder's shares of the Asian Growth Fund. The
reorganization has been structured so that shareholders of the Asian Growth Fund
will not recognize taxable gain or loss as a result of the reorganization.
Your Board of Directors has concluded that the proposal is in the best interests
of the Asian Growth Fund and its shareholders. The Board recommends that the
shareholders vote "for" the proposal.
We welcome your attendance at the Meeting of Shareholders. Whether or not you
are able to attend in person, please sign, date and return the enclosed proxy
card promptly.
If you have any questions related to the Special Meeting and/or this proxy,
please call us at 1-800-238-6263.
Sincerely,
SHAUN P. MATHEWS
President
2
<PAGE>
AETNA SERIES FUND, INC.
ASIAN GROWTH FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AUGUST 12, 1996
A Special Meeting of Shareholders of the Aetna Asian Growth Fund (the
"Asian Growth Fund"), a series of Aetna Series Fund, Inc. (the "Fund"), will be
held on September 13, 1996 at 9:00 a.m. Eastern time, at 151 Farmington Avenue,
Hartford, Connecticut 06156-8962 for the following purposes, which are more
fully described in the accompanying Prospectus/Proxy Statement dated August 12,
1996:
1. to consider and act upon a Plan of Reorganization and Liquidation, and
related amendment to the charter of the Company, providing for the
transfer of the assets of the Asian Growth Fund to the Aetna
International Growth Fund, another portfolio of the Fund, in exchange
for shares of the International Growth Fund and the distribution of
such shares to shareholders of the Asian Growth Fund in liquidation of
the Asian Growth Fund; and
2. to transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
Shareholders of record of the Asian Growth Fund at the close of business on
August 2, 1996 are entitled to notice of, and to vote at, the Meeting or any
adjournment thereof. The enclosed proxy is being solicited on behalf of the
Board of Directors of the Fund.
Each shareholder who does not expect to attend in person is requested to
complete, date, sign and return promptly the enclosed form of proxy.
By order of the Board of
Directors,
Susan E. Bryant
Secretary
Dated: August 12, 1996
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy card, sign and
date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. To save any additional expense of further
solicitation, please mail your proxy promptly.
<PAGE>
AETNA SERIES FUND, INC.
AETNA ASIAN GROWTH FUND
151 FARMINGTON AVENUE
HARTFORD, CONNECTICUT 06156
COMBINED PROSPECTUS/PROXY STATEMENT
AUGUST 12, 1996
This Combined Prospectus/Proxy Statement is sent to you in connection with
the solicitation of proxies by the Board of Directors (the "Board") of Aetna
Series Fund, Inc. (the "Fund") for a Special Meeting of Shareholders (the
"Meeting") to be held at the offices of the Fund, 151 Farmington Avenue,
Hartford, Connecticut 06156 on September 13, 1996, at 9:00 a.m., Eastern time,
at which shareholders of the Aetna Asian Growth Fund (the "Asian Growth Fund")
will be asked to consider and approve a proposed Plan of Reorganization and
Liquidation dated as of April 30, 1996 (the "Plan").
The Plan provides for the transfer of the assets of the Asian Growth Fund
to the Aetna International Growth Fund (the "International Growth Fund"),
another portfolio of the Fund, in exchange for shares of the International
Growth Fund. Following such transfer, shares of the International Growth Fund
will be distributed to the shareholders of the Asian Growth Fund in liquidation
of the Asian Growth Fund. As a result of the proposed transactions, each
shareholder of each class of the Asian Growth Fund will receive that number of
full and fractional shares of the corresponding class of the International
Growth Fund equal in value at the close of business on the date of the exchange
to the value of that shareholder's shares of the Asian Growth Fund. These
transactions are referred to as the "Reorganization." (The International Growth
Fund and the Asian Growth Fund are sometimes referred to as a "Portfolio" and
together as the "Portfolios").
The Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund is
organized as a Maryland corporation, and issues its shares of common stock in
separate series portfolios, each with its own investment objective and policies.
The primary objective of the International Growth Fund is to seek long-term
capital growth primarily through investment in a diversified portfolio of common
stocks principally traded in countries outside North America. Because each
Portfolio is "diversified," it is subject to certain requirements under the 1940
Act that limit the amount of its assets that may be invested in any one company.
The investment adviser to both Portfolios is Aetna Life Insurance and
Annuity Company ("ALIAC"). ALIAC also serves as a distributor, administrator and
shareholder servicing agent to both Portfolios.
<PAGE>
This Prospectus/Proxy Statement, which you should keep for future
reference, sets forth concisely the information about the International Growth
Fund that a prospective investor should know before voting. THIS
PROSPECTUS/PROXY STATEMENT IS ACCOMPANIED BY THE PROSPECTUS OF AETNA SERIES
FUND, INC. FOR THE INTERNATIONAL GROWTH FUND DATED MARCH 1, 1996, AND THE ANNUAL
REPORT OF THE FUND AS OF OCTOBER 31, 1995, WHICH ARE INCORPORATED BY REFERENCE
IN THEIR ENTIRETY. The Prospectus also includes information about the Asian
Growth Fund. A Statement of Additional Information dated August 12, 1996
relating to this Prospectus/Proxy Statement (the "Related Statement of
Additional Information") has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated by reference into this
Prospectus/Proxy Statement. A Statement of Additional Information dated March 1,
1996, containing additional information about the International Growth Fund and
the Asian Growth Fund, has been filed with the Commission and is incorporated
into the Related Statement of Additional Information. A copy of the Related
Statement of Additional Information may be obtained without charge by writing to
ALIAC at 151 Farmington Avenue, Hartford, Connecticut 06156-8962, or by calling
ALIAC toll-free at 1-800-238-6263.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
2
<PAGE>
SYNOPSIS
This Synopsis provides a concise summary of the information contained in
this Prospectus/Proxy Statement. This Synopsis is qualified by reference to the
more complete information contained elsewhere in this Prospectus/Proxy
Statement, including information incorporated herein from the attached
Prospectus for the International Growth Fund dated March 1, 1996 (the
"Prospectus"), and in the Plan of Reorganization and Liquidation attached to
this Prospectus/Proxy Statement as Exhibit A.
The Plan of You are being asked to approve a Plan of
Reorganization and Reorganization and Liquidation. Under the Plan,
Liquidation the Asian Growth Fund will transfer substantially
all of its assets to the International Growth
Fund. In exchange, the International Growth Fund
will assume certain liabilities of the Asian
Growth Fund existing on the business day before
the transfer of assets. At the time of the
transfer, the International Growth Fund will issue
shares with an aggregate value equal to the
aggregate net asset value of the assets
transferred to the International Growth Fund by
the Asian Growth Fund. Following the transfer,
shares of the International Growth Fund will be
distributed to shareholders of the Asian Growth
Fund. After the transaction, you will receive that
number of shares of the International Growth Fund
with a total value equal to the net asset value of
your shares of the Asian Growth Fund, as
determined at the close of business on the date of
the exchange. You will receive the same class of
shares of the International Growth Fund as you
owned of the Asian Growth Fund (Adviser Class or
Select Class). You will not be charged a sales
charge for this transaction. See "Reasons for the
Transaction" and "Information About the
Transaction," and the copy of the Plan, which is
attached as Exhibit A.
Charter Amendment You are also being asked to approve an amendment
to the Fund's corporate charter (the "Charter
Amendment"), which must be filed under Maryland
law in order to implement the Reorganization. See
"Information About the Transaction."
3
<PAGE>
Tax Consequences The Fund will receive an opinion of counsel to the
effect that no gain or loss will be recognized by
the Asian Growth Fund, the International Growth
Fund, or the shareholders of the Asian Growth Fund
as a result of the Reorganization. See
"Information about the Transaction."
Investment International Growth Fund. The primary investment
Objectives and objective of the International Growth Fund is to
Policies seek long-term capital growth primarily through
investment in a diversified portfolio of common
stocks principally traded in countries outside of
North America. The International Growth Fund
follows a policy of maintaining at least 65% of
its net assets among securities principally traded
in three or more countries including Australia,
Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Indonesia, Italy, Japan,
Korea, Luxembourg, Malaysia, New Zealand, the
Netherlands, Norway, the Philippines, Singapore,
Spain, Sweden, Switzerland, Taiwan, Thailand, and
the United Kingdom.
Asian Growth Fund. The primary investment
objective of the Asian Growth Fund is to seek
long-term growth of capital primarily through
investment in a diversified portfolio of common
stocks principally traded in countries in Asia
excluding Japan. The Asian Growth Fund follows a
policy of investing at least 65% of its total
assets among securities principally traded in
China, Hong Kong, India, Indonesia, Malaysia,
Pakistan, the Philippines, Singapore, Korea, Sri
Lanka, Taiwan, and Thailand.
Neither Portfolio targets any given level of
current income, and each Portfolio has additional
investment policies which are similar and which
are discussed under "Comparison of the Portfolios'
Investment Objectives and Policies," below.
Share Classes Each Portfolio currently offers shares of common
stock classified into two classes: Select Class
shares and Adviser
4
<PAGE>
Class shares. For each Portfolio, the Select Class
and Adviser Class shareholders are subject to the
same respective distribution and shareholder
service arrangements, including the rate at which
fees are paid for such arrangements and services.
As between the two classes, shares have the same
rights, privileges and preferences, except with
respect to: (a) the effect of the contingent
deferred sales charge ("CDSC"), if any; (b) the
distribution and/or service fees borne by the
class; (c) the expenses allocable exclusively to a
class; (d) voting rights on matters exclusively
affecting a class; and (e) the exchange privilege
of a class. This Prospectus/Proxy Statement is
accompanied by the Adviser Class Prospectus and/or
Select Class Prospectus for each series of the
Fund, including the Portfolios.
Investment Adviser Aetna Life Insurance and
Annuity Company ("ALIAC") is the investment
adviser for each Portfolio. Aeltus Investment
Management, Inc., an affiliate of ALIAC, is the
sub-adviser of the International Growth Fund. See
"Information About the Portfolios."
Fees and Expenses The maximum investment advisory fee paid by the
International Growth Fund is 0.850% of average
daily net assets. The maximum investment advisory
fee paid by the Asian Growth Fund is 1.000% of
average daily net assets. For the six month period
ended April 30, 1996, total operating expenses
(annualized) of the Select Class of the
International Growth Fund and Asian Growth Fund
are 1.88% and 1.55% (2.29% before reimbursement),
respectively. For the same period, total operating
expenses (annualized) of the Adviser Class of the
International Growth Fund and the Asian Growth
Fund are 2.63% and 2.30% (3.04% before
reimbursement), respectively. After the
Reorganization, it is expected that total
operating expenses of the Select Class and the
Adviser Class will be 1.88% and 2.63%,
respectively. Therefore, assuming no waiver of
fees by ALIAC, it is anticipated that
5
<PAGE>
shareholders will be subject to lower overall
levels of investment advisory fees and total fund
expenses for the foreseeable future as a result of
the Reorganization. See "Comparison of Fees and
Expenses."
Distribution and The procedures for purchasing and redeeming shares
Purchase Procedures; are materially the same for each Portfolio, and
Exchange Rights; each Portfolio has materially similar exchange
Redemption privileges.
Procedures
Application for The Fund, ALIAC and Aetna Life Insurance Company,
Exemptive Relief an affiliate of ALIAC, have applied for an order
from the Commission that would permit the Fund to
carry out the Reorganization, due to certain
provisions of the 1940 Act which might otherwise
be construed as prohibiting the transactions
involved in the Reorganization.
Other Considerations In the event the shareholders of the Asian Growth
Fund do not approve the Reorganization, the Board
will consider possible alternatives to the
proposed Reorganization. Shareholders have no
right of appraisal, but may continue to redeem
their shares in accordance with normal Fund
policies.
6
<PAGE>
RISK FACTORS
As described more fully below under "Comparison of the Portfolios'
Investment Objectives and Policies," the principal difference in the investment
objectives and policies of the two Portfolios is that the International Growth
Fund has a broader range of permissible foreign countries in which to invest
than the Asian Growth Fund.
ALIAC's management informed the Board that it had evaluated the risk
profile of the Asian Growth Fund and believed that, due to its narrower scope of
permissible investments, the Asian Growth Fund is akin to a "sector" fund and
has a greater risk exposure than the International Growth Fund due to the
mandatory concentration of investments within certain Asian countries. Although
the International Growth Fund may invest in a broader range of foreign countries
than the Asian Growth Fund, which may tend to decrease the risks undertaken by a
shareholder to some extent, shareholders should bear in mind that investments in
foreign securities generally involve certain risks not ordinarily associated
with investments in securities of domestic issuers. All such risks are risks
that have been undertaken by investing in the Asian Growth Fund.
Such risks include fluctuations in exchange rates, adverse foreign
political and economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. Since the
Portfolios may invest in securities denominated or quoted in currencies other
than the U.S. dollar, changes in foreign currency exchange rates will affect the
value of securities in the portfolio and the unrealized appreciation or
depreciation of investments so far as U.S. investors are concerned. In addition,
with respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, political or social instability, or diplomatic
developments that could adversely affect investments in those countries.
Furthermore, there may be less publicly available information about a
foreign company than about a U.S. company, and foreign companies may not be
subject to accounting, auditing, and financial reporting standards and
requirements comparable to or as uniform as those of U.S. companies. Foreign
securities markets, while growing in volume, have, for the most part,
substantially less volume than U.S. markets. Securities of many foreign
companies are less liquid and their prices more volatile than securities of
comparable U.S. companies. Transactional costs are generally higher than in U.S.
securities markets, and there is generally less government supervision and
regulation of exchanges, brokers, and issuers than there is in the U.S. The Fund
might have greater difficulty taking appropriate legal action with respect to
foreign investments in non-U.S. courts than with respect to domestic issuers in
U.S. courts. Transactions in foreign securities may involve greater time from
the trade date
7
<PAGE>
until settlement than domestic securities transactions and involve the risk of
possible losses through the holding of securities by custodians and securities
depositories in foreign countries.
COMPARISON OF FEES AND EXPENSES
The following tables summarize and compare the fees and expenses of the
Portfolios as of April 30, 1996. These tables are intended to assist
shareholders in comparing the various costs and expenses that shareholders
indirectly bear with respect to an investment in the Asian Growth Fund and those
that they can expect to bear indirectly as shareholders of the International
Growth Fund. Actual expenses may be more or less than those set forth below. In
addition, the "Example" set forth below should not be considered a
representation of future expenses, which will vary depending upon actual
investment returns and expenses.
The tables are arranged to reflect information pertaining to the Select
Class and the Adviser Class separately.
8
<PAGE>
<TABLE>
<CAPTION>
Select Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions Reinvestment Fee
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Growth None None None None
Asian Growth None None None None
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Select Class
Annual Operating Expenses
(as a percentage of average daily net assets)
Total
Operating
Management/ Other Expenses
Advisory Fee Expenses (after fee
(after fee Administrative (after expense waiver/expense
waiver)* Fee reimbursement)* reimbursement)*
- ------------------------------------------------------------------------------------------------------
International
<S> <C> <C> <C> <C>
Growth 0.85% 0.25% 0.78% 1.88%
Asian Growth 0.54%** 0.25% 0.76%** 1.55%**
Pro Forma for
Combined 0.85% 0.25% 0.78% 1.88%
Portfolios
</TABLE>
* From time to time, ALIAC may agree to waive all or a portion of its
investment advisory fee and/or its administrative fee for a Portfolio
and/or may agree to reimburse some or all of a Portfolio's other expenses.
Such an arrangement increases the relevant Portfolio's total return by
reducing its expenses. The expenses shown above are based on the
Portfolios' six month period ended April 30, 1996 (unaudited) and are
annualized. The expenses reflect the expense waiver/reimbursement
arrangements in effect as of the date of this Prospectus / Proxy Statement
(see below). For the fiscal year ended October 31, 1995, the International
Growth Fund's total operating expenses were 1.50%.
** As of the date of this Prospectus / Proxy Statement, there is a fee
waiver/expense reimbursement arrangement in effect for the Asian Growth
Fund. This arrangement limits the total operating expenses for the Asian
Growth Fund to the amount shown above. Although this arrangement is in
effect as of the date hereof, it may be terminated by ALIAC at any time.
Without this arrangement, the Asian Growth Fund's investment advisory fee
would be 1.00% and its total operating expenses would be 2.29%. For the
fiscal year ended October 31, 1995, the Asian Growth Fund's total operating
expenses were 1.55% after reimbursement and 2.01% before reimbursement.
9
<PAGE>
Select Class
Example
Using the above expenses (after waivers), you would pay the following expenses
on a $1,000 investment, assuming a 5% annual return and redemption at the end of
each of the periods shown:
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------
International 19 59 102 220
Growth
Asian Growth 16 49 84 185
Pro Forma for
Combined 19 59 102 220
Portfolios
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. The expenses
of the Asian Grown Fund reflect the current waiver of fees by ALIAC. Assuming no
waiver of fees, the expenses of the Asian Growth Fund for the 1, 3, 5 and 10
year periods would be $23, $72, $123 and $263, respectively.
Adviser Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions1 Reinvestment Fee
- -------------------------------------------------------------------------------
None
International Growth None 1.0% None
Asian Growth None 1.0% None None
1 The contingent deferred sales charge set forth in the above table is the
maximum redemption charge imposed on Adviser Class shares. Investors may
pay charges less than 1.0%, depending on the length of time the shares are
held. Adviser Class shares of each Portfolio are also subject to an annual
distribution fee of 0.50% and an annual service fee of 0.25% of the value
of average daily net assets of the Adviser Class. See "Fees and Charges"
in the Adviser Class Prospectus.
11
<PAGE>
<TABLE>
<CAPTION>
Adviser Class
Annual Operating Expenses
(as a percentage of average daily net assets)
Total
Management/ Other Operating Expenses
Advisory Fee Rule Expenses* (after fee waiver/
(after fee Administrative 12b-1 (after expense expense
waiver)* Fee Fee reimbursement) reimbursement)*
- --------------------------------------------------------------------------------------------------
International
<S> <C> <C> <C> <C> <C>
Growth 0.85% 0.25% 0.50% 1.03% 2.63%
Asian Growth 0.54%** 0.25%** 0.50% 1.01%** 2.30%**
Pro Forma for
Combined
Portfolios 0.85% 0.25% 0.50% 1.03% 2.63%
</TABLE>
* From time to time, ALIAC may agree to waive all or a portion of its
investment advisory fee and/or its administrative fee for a Portfolio
and/or may agree to reimburse some or all of a Portfolio's other expenses.
Such an arrangement increases the relevant Portfolio's total return by
reducing its expenses. The expenses shown above are based on the
Portfolios' six month period ended April 30, 1996 (unaudited) and are
annualized. The expenses reflect the expense waiver/reimbursement
arrangements in effect as of the date of this Prospectus / Proxy Statement
(see below). For the fiscal year ended October 31, 1995, the International
Growth Fund's total operating expenses were 2.25%.
** As of the date of this Prospectus / Proxy Statement, there is a fee
waiver/expense reimbursement arrangement in effect for the Asian Growth
Fund. This arrangement limits the total operating expenses for this
Portfolio to the amount shown above. Although this arrangement is in
effect as of the date hereof, it may be terminated by ALIAC at any time.
Without this arrangement, the Asian Growth Fund's investment advisory fee
would be 1.00% and its total operating expenses would be 3.04%. For the
fiscal year ended October 31, 1995, the Asian Growth Fund's total
operating expenses were 2.30 % after reimbursement and 2.76% before
reimbursement.
12
<PAGE>
Adviser Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and either redemption at the end of each
of the periods shown or no redemption:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
International Growth
Redemption at end of each time period $37 $87 $140 $296
No Redemption 27 82 140 296
Asian Growth
Redemption at end of each time period 33 77 123 264
No Redemption 23 72 123 264
Pro Forma for Combined Portfolios
Redemption at end of each time period 37 87 140 296
No Redemption 27 82 140 296
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. The expenses
of the Asian Grown Fund reflect the current waiver of fees by ALIAC. Assuming no
waiver of fees, the expenses of the Asian Growth Fund for the 1, 3, 5 and 10
year periods, would be $41, $99, $160 and $336, respectively, with a redemption
at the end of each time period, and $31, $94, $160 and $336, respectively,
without a redemption at the end of each time period.
13
<PAGE>
INFORMATION ABOUT THE TRANSACTION
PLAN OF REORGANIZATION AND LIQUIDATION. The proposed Plan provides that the
International Growth Fund will acquire all of the assets of the Asian Growth
Fund, and assume the Asian Growth Fund's stated liabilities, in exchange for
shares of the International Growth Fund upon a closing to take place at the
commencement of business on the business day following the Valuation Date (the
"Closing Date") in accordance with the terms of the Plan. The liabilities of the
Asian Growth Fund to be assumed by the International Growth Fund will be those
appearing on an unaudited statement of assets and liabilities of the Asian
Growth Fund prepared as of the close of business on the day prior to the
transfer of assets. The aggregate net asset value of the total number of shares
of the International Growth Fund issued in the exchange will equal the aggregate
net asset value of the shares of the Asian Growth Fund then outstanding.
On or before the Closing Date, the International Growth Fund will file
Articles of Amendment to the Fund's charter which will make the Reorganization
effective for purposes of Maryland corporate law (the "Charter Amendment"). A
copy of the form of the Charter Amendment is included in the Plan, which is
attached as Exhibit A.
For purposes of the Reorganization, the number of shares of the
International Growth Fund to be issued to the Asian Growth Fund will be
determined on the basis of the International Growth Fund's and the Asian Growth
Fund's relative net asset value per share, for their respective classes of
shares; that is, by dividing the value of the Asian Growth Fund assets, less
liabilities, attributable to each class of shares by the net asset value of one
share of the corresponding class of the International Growth Fund, computed as
of the close of business on the Valuation Date. These determinations will be
made in accordance with the valuation procedures set forth in the Portfolios'
then current Prospectuses and Statements of Additional Information.
On, or as soon as practicable after, the Closing Date, the Asian Growth
Fund will liquidate and distribute pro rata (based on relative net asset values,
as described above) to its shareholders of record, on a class by class basis,
the shares of the International Growth Fund received in the Reorganization.
Shareholders of record will be determined as of the close of business on the
Valuation Date. The liquidation and distribution will be accomplished by
establishing accounts on the share records of the International Growth Fund in
the name of the Asian Growth Fund shareholders, each account reflecting
ownership of the respective number of shares of the International Growth Fund
due to each such Asian Growth Fund shareholder. Select and Adviser Class
shareholders of the Asian Growth Fund will receive Select Class and Adviser
Class shares, respectively, of the International Growth Fund. After such
distribution, the Asian Growth Fund will be terminated.
14
<PAGE>
The consummation of the Reorganization is subject to certain conditions set
forth in the Plan. The Board of Directors may terminate the Plan at any time
prior to the closing of the Reorganization without liability on the part of
either Portfolio.
If the Reorganization is approved by shareholders, the Asian Growth Fund
reserves the right to sell portfolio securities and/or purchase other
securities, to the extent necessary so that the asset composition of the Asian
Growth Fund is consistent with the investment policies and restrictions of both
Portfolios. As of the date of this Prospectus/Proxy Statement, however, ALIAC
does not anticipate that any significant changes will need to be made to the
portfolio of the Asian Growth Fund for these purposes.
Approval of the Plan by shareholders will be deemed to constitute an
approval of the amendment of any investment restrictions of the Asian Growth
Fund that might be deemed to prohibit the transactions contemplated in
connection with the Reorganization.
DESCRIPTION OF SHARES OF THE INTERNATIONAL GROWTH FUND. Full and fractional
shares of the respective classes of the International Growth Fund will be issued
to the shareholders of the Asian Growth Fund in accordance with the procedures
under the Plan as described above. Each share will be fully paid and
nonassessable when issued and transferrable without restriction and will have no
preemptive or conversion rights.
EXPENSES. The Reorganization will be effected for each Asian Growth Fund
shareholder at net asset value without the imposition of any sales charges.
Expenses otherwise incurred by the Portfolios in connection with the
transactions will be borne by ALIAC, the investment adviser to both Portfolios.
In accordance with the Fund's policies, no new certificates for the
International Growth Fund shares will be issued.
THE CHARTER AMENDMENT. Because the Fund is organized as a Maryland
corporation, the Charter Amendment must be filed with the Department of Taxation
and Assessments of the State of Maryland in order to implement the terms of the
Reorganization. From a Maryland state law perspective, the Reorganization does
not involve a transfer of assets in exchange for issuance of shares, because the
Portfolios are series of shares issued by the same corporate entity. For
Maryland state law purposes, the Reorganization is characterized as a
reclassification of shares. Therefore, the Charter Amendment will reclassify
unissued shares of each class of the Asian Growth Fund into unissued shares of
the corresponding class of the International Growth Fund and reclassify all of
the outstanding shares of the Asian Growth Fund into outstanding shares of the
International Growth Fund in accordance with a formula that reflects the terms
of the Reorganization described above (based on relative net asset values of the
outstanding shares, on a class-by-class basis).
15
<PAGE>
SHAREHOLDER APPROVAL. Approval of the Plan and the Charter Amendment
requires the affirmative vote of a majority of the votes entitled to be cast, of
the Asian Growth Fund. Shareholders of the Select Class and Adviser Class shares
of the Asian Growth Fund will vote together as a single class on the
Reorganization and the Charter Amendment.
The Board may terminate the Plan at any time prior to the closing of the
transaction.
FEDERAL INCOME TAX CONSEQUENCES. At the closing of the Reorganization the
Company will receive an opinion from Kramer, Levin, Naftalis & Frankel to the
effect that, on the basis of then current law and certain assumptions and
representations, for federal income tax purposes: (1) the Asian Growth Fund and
the International Growth Fund will each be treated as a separate corporation for
federal income tax purposes; (2) the exchange by the Asian Growth Fund of
substantially all of its assets in exchange for shares of the International
Growth Fund and the assumption by the International Growth Fund of certain
stated liabilities of the Asian Growth Fund, and the subsequent liquidation of
the Asian Growth Fund pursuant to the Plan will constitute a reorganization
within the meaning of Code section 368(a)(l)(C) and that the Asian Growth Fund
and the International Growth Fund will each be "a party to a reorganization"
within the meaning of Code section 368(b); (3) the Asian Growth Fund will not
recognize any gain or loss as a result of the Reorganization; (4) the
International Growth Fund will not recognize any gain or loss on the receipt of
the assets of the Asian Growth Fund in exchange for shares of the International
Growth Fund; (5) the shareholders of the Asian Growth Fund will not recognize
any gain or loss on the exchange of their shares of the Asian Growth Fund for
shares of the International Growth Fund; (6) the aggregate tax basis of shares
of the International Growth Fund received by each shareholder of the Asian
Growth Fund will be the same as the aggregate tax basis of the shares of the
Asian Growth Fund exchanged therefor; (7) the International Growth Fund's
adjusted tax bases in the assets received from the Asian Growth Fund in the
Reorganization will be the same as the adjusted tax bases of such assets in the
hands of the Asian Growth Fund immediately prior to the Reorganization; (8) the
holding period of each former shareholder of the Asian Growth Fund in the shares
of the International Growth Fund received in the Reorganization will include the
period during which such shareholder held his shares of the Asian Growth Fund as
a capital asset; and (9) the International Growth Fund's holding periods in the
assets received from the Asian Growth Fund in the Reorganization will include
the holding periods of such assets in the hands of the Asian Growth Fund
immediately prior to the Reorganization.
The Asian Growth Fund has capital loss carryovers of $289,000 from the year
ending in 1994 and $2,797,000 from the year ending in 1995. A capital loss
carryover can offset capital gain for the eight taxable years succeeding the
year in which the loss
16
<PAGE>
arises, after which time the unused portion of the carryover will expire. Thus,
while generally capital gain is distributed and currently taxed to shareholders,
capital gain realized by the Asian Growth Fund may be offset by the capital loss
carryovers and not distributed to shareholders. The Asian Growth Fund's capital
loss carryovers will expire in the years ending in 2002 and 2003, respectively.
As a consequence of the Reorganization, the Asian Growth Fund's capital
loss carryovers will become carryovers of the International Growth Fund and
their benefits will therefore be shared with the shareholders of the
International Growth Fund. In addition, the Asian Growth Fund's current tax year
will terminate and, as a result, any unused capital loss carryovers will expire
one year sooner than they would have if the Reorganization did not take place.
The Reorganization is unlikely to cause an ownership change of Asian Growth
Fund under Code section 382 because of the overlapping ownership of the Asian
Growth Fund and the International Growth Fund and, therefore, the capital loss
carryovers will not be subject to limitation under Code section 383. If the
Reorganization does cause an ownership change, the Asian Growth Fund capital
loss carryovers available to offset International Growth Fund capital gain would
be limited for any year after the Reorganization to an amount equal to the
long-term tax-exempt rate multiplied by the equity value of the Asian Growth
Fund. For example, if an ownership change occurs at a time when the equity value
of the Asian Growth Fund is $26,000,000 and the long-term tax-exempt rate is
5.3%, the capital gain that could be offset by the Asian Growth Fund capital
loss carryovers would be limited to $1,378,000 per year.
Changes in share ownership in the International Growth Fund occurring
subsequent to the Reorganization could cause an ownership change that would
limit the ability of the International Growth Fund to use the capital loss
carryovers. The types of owner shifts that could cause such limitation include
the acquisition of another fund by the International Growth Fund, acquisitions
of shares of the International Growth Fund by persons who acquire 5% or more of
its outstanding shares, certain dispositions of shares of the International
Growth Fund by ALIC and/or ALIAC, and certain ownership changes in Aetna Life
Insurance and Casualty Company.
CAPITALIZATION. The following table shows the capitalization of the Asian
Growth Fund and the International Growth Fund as of April 30, 1996, and on a pro
forma basis as of that date giving effect to the proposed acquisition of assets
at net asset value:
17
<PAGE>
Asian Growth International Pro Forma
Fund Growth Fund Combined
---- ----------- --------
Net assets $25,888,531 $41,256,398 $67,144,929
NAV per
share:
Select Class $9.38 $11.63 $11.63
Adviser Class $9.36 $11.61 $11.61
Shares
outstanding:
Select Class 2,694,284 1,684,648 3,857,808
Adviser Class 65,695 1,866,272 1,919,216
REGIONAL INVESTMENT CONCENTRATIONS. The chart set forth as Schedule 1 to
this Prospectus/Proxy Statement provides, on a country-by-country basis, a
breakdown of how the assets of the Portfolios were invested as of April 30,
1996, and on a pro forma basis, giving effect to the Reorganization if it had
occurred as of such date.
EXEMPTIVE APPLICATION. As of March 31, 1996, ALIAC owned 11,702 shares
(0.69%) of the Select Class of the International Growth Fund and 1,762,533
shares (94.62%) of the Adviser Class of the International Growth Fund (amounting
to 49.99% of the total outstanding shares of the International Growth Fund), and
467,409 shares (17.35%) of the Select Class of the Asian Growth Fund (amounting
to 16.89% of the total outstanding shares of the Asian Growth Fund). In
addition, Aetna Life Insurance Company, an affiliate of ALIAC, owned 2,066,778
shares (74.70%) of the Select Class of the Asian Growth Fund.
The 1940 Act generally prohibits an "affiliated person" from selling a
security or other property to a fund or from purchasing a security from a fund,
and when funds have common affiliated persons, transfers of securities between
the funds are generally prohibited. These provisions could be deemed to prohibit
the transfers contemplated by the Plan, in particular because ALIAC and its
affiliates have had a substantial level of ownership as shareholders of the
Portfolios.
However, the 1940 Act also provides that the Commission shall issue such
order granting an exemption from these prohibitions if, among other
requirements, evidence establishes that (1) the terms of the proposed
transaction, including the consideration to be paid or received, are reasonable
and fair and do not involve overreaching on the part of any person concerned,
(2) the proposed transaction is consistent with the investment policies of each
fund, and (3) the proposed transaction is
18
<PAGE>
consistent with the general purposes of the 1940 Act. The Fund, ALIAC and Aetna
Life Insurance Company have filed an application with the Commission for such an
order, and the Fund believes that the applicants meet the applicable standards
for the receipt of the order. The Commission published a notice of the
application on July 16, 1996 and, if no hearing is requested, it is expected
that the Commission will issue an order in August, 1996. However, there can be
no assurance that the Commission will issue the order. The Fund does not intend
to effect the Reorganization without receiving such an order.
REASONS FOR THE TRANSACTION
The Board considered the Reorganization at meetings on September 19-20,
1995, September 29, 1995 and April 30, 1996. The noninterested Directors were
represented by their own counsel throughout. The Directors approved and
recommended that the shareholders of the Asian Growth Fund approve, a tax-free
reorganization of the Asian Growth Fund into the International Growth Fund, in
accordance with the terms of the Plan.
In reaching its decision, the Board carefully evaluated the risks and
benefits of the proposed Reorganization. The Board was aware that the Asian
Growth Fund had been unable to achieve a significant growth of assets and
therefore had been unable to achieve the efficiencies of a larger portfolio. The
Board was also informed by ALIAC that ALIAC would not continue to waive its fees
indefinitely.
The Board evaluated the risk profile of the Asian Growth Fund and
considered that the Asian Growth Fund may have a greater risk exposure than the
International Growth Fund due to the mandatory concentration of investments
within certain Asian countries. The Board considered that, as a general matter,
long- term capital appreciation may more likely be realized through investments
in a more diversified international investment portfolio such as that of the
International Growth Fund. The Board believed that an Asian Growth Fund
shareholder could conclude that shares of the International Growth Fund provide
a potential for achieving long-term capital appreciation through foreign
investments with potentially less short-term volatility than the Asian Growth
Fund. The Board also noted the similarities of the investment objective and
policies of the Portfolios.
The Board also considered the fact that the Portfolios are managed by
affiliated entities and that they had other common service providers. The Board
was told by ALIAC that ALIAC anticipated a reduction in expenses could result
from the elimination of duplicative costs for services presently performed for
both Portfolios. The Board was told that by combining the Portfolios, ALIAC
would be able to concentrate its marketing resources on a single foreign stock
fund. Finally, the Board considered that the Reorganization could be done
without shareholders recognizing taxable gain or loss from the transaction.
Given the above factors and the similarity in the investment strategies of
the Asian Growth Fund and the International Growth Fund, the Board concluded
that combining the two Portfolios would be appropriate. The combination would
enable the shareholders of the combined Portfolio to benefit from certain
economies of scale, including a lower expense ratio than would be experienced in
the future by the Asian Growth Fund, while also affording shareholders the
continuing opportunity to participate in a portfolio of foreign securities.
19
<PAGE>
The Board concluded that the most appropriate method of combining the Asian
Growth Fund into the International Growth Fund would be through a tax-free
acquisition of the assets of the Asian Growth Fund by the International Growth
Fund. In its deliberations, the Board considered other alternatives available to
shareholders, including redeeming shares of the Asian Growth Fund prior to the
Reorganization. The Board also concluded that the Reorganization was a better
alternative than a taxable redemption of Asian Growth Fund shares or a simple
liquidation and dissolution of the Asian Growth Fund.
In reaching its decision to recommend shareholder approval of the
Reorganization, the Board made inquiries into a number of factors. The Board was
informed of the expense ratios of the Portfolios, and of applicable expense
waivers, as described above. In addition, the Board was advised that ALIAC could
not agree to indefinitely extend its voluntary expense waiver and reimbursement
arrangement. Without giving effect to ALIAC's voluntary waiver/reimbursement,
the expense ratio of the Asian Growth Fund for the six month period ended April
30, 1996 (annualized) had been 2.29% and 3.04%, for the Select Class and Adviser
Class, respectively.
The Board considered the contractual rate of the advisory fees payable by
each Portfolio, noting that, at then current asset levels and as of the date of
this Prospectus/Proxy Statement, the International Growth Fund pays a monthly
fee at an annual rate of .850% of average daily net assets and that the Asian
Growth Fund pays a monthly fee equal to 1.00% of its average net assets, before
waivers by ALIAC. The Board also considered the following comparative investment
performance information regarding the Portfolios:
20
<PAGE>
Total Return Information
Average Annual
Total Return
One Year Period From Inception
ended October 31, 1995 of Portfolio
---------------------- ------------
Adviser Class*
- --------------
International Growth -1.81% +0.53%
Asian Growth -13.11% -2.36%
Select Class
- ------------
International Growth -0.04% +4.93%
Asian Growth -11.54% -9.12%
* Reflects deduction of the maximum 1% CDSC, assuming shares were redeemed at
the end of the period.
The factors considered by the Board included, among other things: (1)
recent and anticipated asset and expense levels of the Portfolios and future
prospects of each Portfolio; (2) the similarity of the investment advisory,
distribution and administration arrangements, the fact that the Portfolios have
the same custodian, transfer agent, dividend disbursing agent and independent
accountants (the "Service Providers"), and the fact that the Portfolios expect
the Reorganization to realize savings in fixed expenses because of resulting
efficiencies in administration, portfolio management, and marketing; (3)
alternative options to the Reorganization; (4) the potential benefits to Aetna;
(5) the terms and conditions of the Reorganization; (6) the similarity of the
investment objectives, policies and restrictions of the two Portfolios; (7) the
representation that Aetna would bear the costs of the Reorganization; and (8)
the tax consequences expected to result from the Reorganization.
Based upon these factors, all the Directors present at the April 30, 1996
meeting, unanimously determined that the transaction would not result in
dilution of the interests of, and would be in the best interest of, the
shareholders of each of the Portfolios and recommended that the shareholders of
the Asian Growth Fund approve the Reorganization and the Plan. The Directors
present at the April 30, 1996 Board Meeting constituted a majority of all of the
Directors and a majority of those Directors who are not "interested persons" of
ALIAC or the Portfolios, within the meaning of the 1940 Act (the "Independent
Directors").
COMPARISON OF THE PORTFOLIOS' INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The investment objectives and policies of the Portfolios are
similar. Both seek long-term capital growth by investing in a diversified
portfolio of common stocks principally traded in countries outside of North
America. While the Asian
21
<PAGE>
Growth Fund's principal investments are limited to countries in Asia excluding
Japan, the International Growth Fund may invest principally in a broader range
of countries, including 8 of the 12 countries in which the Asian Growth Fund may
currently invest - Hong Kong, Indonesia, South Korea, Malaysia, the Philippines,
Singapore, Taiwan, and Thailand.
ASIAN GROWTH FUND. The Asian Growth Fund seeks long- term growth of capital
primarily through investment in a diversified portfolio of common stocks
principally traded in countries in Asia excluding Japan. The Asian Growth Fund
does not target any given level of current income. The Asian Growth Fund seeks
to achieve its objective by investing at least 65% of its total assets among
securities principally traded in China, Hong Kong, India, Indonesia, Malaysia,
Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan, and
Thailand. The Asian Growth Fund invests primarily in equity securities but may
invest in convertible and preferred stocks. In addition, the Asian Growth Fund
may invest up to 10% of its assets in long-term debt securities if ALIAC
believes they will provide superior returns to common stocks. The Asian Growth
Fund may also enter into forward foreign exchange contracts and purchase
financial futures or options, and purchase securities on a when-issued or
delayed-delivery basis.
INTERNATIONAL GROWTH FUND. The International Growth Fund seeks long-term
capital growth primarily through investment in a diversified portfolio of common
stocks principally traded in countries outside North America. The International
Growth Fund does not target any given level of current income. The International
Growth Fund seeks to achieve its objective by investing at least 65% of its
total assets among securities principally traded in three or more countries
including Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong
Kong, Indonesia, Italy, Japan, Korea, Luxembourg, Malaysia, New Zealand, the
Netherlands, Norway, the Philippines, Singapore, Spain, Sweden, Switzerland,
Taiwan, Thailand and the United Kingdom. The International Growth Fund invests
primarily in equity securities but may invest in convertible and preferred
stocks. Further, from time to time the International Growth Fund may hold up to
10% of its total assets in long-term debt securities with an equivalent Standard
& Poor's Corporation or Moody's Investors Service, Inc. rating of AA/Aa or
above.
The International Growth Fund may enter into forward foreign exchange
contracts or purchase financial futures or options (including options on
futures) as a means to moderate the impact of foreign currency fluctuations. It
also may purchase securities on a when-issued or delayed-delivery basis.
INFORMATION ABOUT THE PORTFOLIOS
22
<PAGE>
INVESTMENT ADVISORY AGREEMENTS. The investment advisory agreement between
the International Growth Fund and ALIAC (the "Investment Advisory Agreement")
contains terms that are substantially the same as those set forth in the current
investment advisory agreement between the Asian Growth Fund and ALIAC except
that the International Growth Fund has a broader ability to use brokerage
commissions on behalf of the Fund, more stringent liability is imposed on the
International Growth Fund's adviser and as set forth below with respect to
advisory fees.
ALIAC, a Connecticut corporation with its principal offices at 151
Farmington Avenue, Hartford, Connecticut 06156, is registered with the
Commission as an investment adviser and, in addition to managing the Portfolios,
provides investment advisory services to other investment companies and for its
general account, all of which together hold over $22 billion in assets. ALIAC is
an indirect wholly owned subsidiary of Aetna Life and Casualty Company, a
diversified financial services company.
Under the Investment Advisory Agreement, ALIAC is, subject to the
supervision of the Board, responsible for managing the assets of each Portfolio
in accordance with its investment objectives and policies. ALIAC furnishes all
necessary facilities and pays the salaries and other related costs of personnel
engaged in providing investment advice to the Fund. It also pays salary, other
fees and expenses for Directors and officers of the Fund who are employees or
affiliated persons of ALIAC.
Aeltus Investment Management Inc., an affiliate of ALIAC, has entered into
a sub-advisory agreement with ALIAC. Pursuant to the sub-advisory agreement,
Aeltus would among other things, engage in portfolio transaction on behalf of
International Growth Fund, subject to the supervision and oversight of ALIAC and
the Board. Aeltus would receive an annual fee of 0.55% on the first $250
million, 0.52% on the next $250 million, 0.505% on the next $250 million and
0.49% on the next $1.25 billion, and 0.455% over $2.0 billion of average daily
net assets of the International Growth Fund's average daily net assets, paid by
ALIAC.
SHARE OWNERSHIP BY ALIAC. As of June 30, 1996, ALIAC owned 0.__% of the
Select Class and __% of the Adviser class of the International Growth Fund. In
the future, ALIAC may redeem a portion of its investment. ALIAC does not expect
that the liquidation of a portion of its investment will have a material impact
on the expense ratio of the International Growth Fund.
ADVISORY AND DISTRIBUTION FEES. Under the current
investment advisory agreements of the Asian Growth Fund and the International
Growth Fund, the Portfolios pay ALIAC advisory fees at the following annual
rates based on average daily net assets:
23
<PAGE>
Average Net Assets International
in Millions Asian Growth Fund Growth Fund
- ------------------ ----------------- -------------
First $250 1.000% 0.850%
$250 - $500 0.875% 0.800%
$500 - $750 0.850% 0.775%
$750 - $2,000 0.825% 0.750%
Over $2,000 0.800% 0.700%
THEREFORE, FOR THE FORESEEABLE FUTURE, SHAREHOLDERS WILL BE SUBJECT TO A LOWER
CONTRACTUAL INVESTMENT ADVISORY FEE IF THE REORGANIZATION IS IMPLEMENTED, SINCE
THE RATE OF INVESTMENT ADVISORY FEES OF THE INTERNATIONAL GROWTH FUND IS
CURRENTLY LOWER THAN THOSE OF THE ASIAN GROWTH FUND AT EACH RESPECTIVE ASSET
LEVEL. If, after the Reorganization, the combined net assets of the Portfolios
remained for a complete year at the amount at which they had been as of April
30, 1996, the aggregate investment advisory fee payable by the International
Growth Fund under the Investment Advisory Agreement with the Adviser would have
been $570,732 per annum, or 0.850% of such assets.
ALIAC has agreed to waive its investment advisory fees to the extent that a
Portfolio's operating expenses (exclusive of interest, taxes, brokerage,
distribution services fees paid pursuant to a Rule 12b-1 plan and extraordinary
expenses, all to the extent permitted by applicable state securities laws and
regulations) in any year exceed the most restrictive limitation prescribed by
any state in which the Portfolio's shares are qualified for sale. Currently, the
most restrictive expense ratio limitation applicable to each Portfolio is that
of California, which amounts to 2-1/2% of the first $30 million of average daily
net assets, 2% of the next $70 million and 1-1/2% of the remaining average daily
net assets of the Portfolio.
Adviser Class shares of both Portfolios are ordinarily subject to a CDSC at
a maximum rate of 1%, declining to 0% after 4 years from the date of initial
purchase. For a 30-day period following the Reorganization, the CDSC applicable
to the Adviser Class shares will be waived for all Asian Growth Fund
shareholders who redeem their newly issued shares of the International Growth
Fund. Adviser Class shares are subject to an annual distribution fee of 0.50%,
and an annual service fee of 0.25%, of the average daily net assets of the
Adviser Class. Select Class shares of both Portfolios are not subject to any
sales charge, contingent deferred sales charge, distribution fee or service fee.
Under a Rule 12b-1 distribution plan (the "Rule 12b-1 plan") between each
Portfolio (for its Adviser Class only) and ALIAC, ALIAC is paid a Rule 12b-1
distribution fee at an annual rate of 0.50% of the average daily net assets of
the Adviser Class shares of each Portfolio. The Rule 12b-1 distribution fees may
be used to cover expenses incurred in promoting the sale of Adviser Class
shares, including (i) costs of printing and
24
<PAGE>
distributing each Portfolio's Prospectus, Statement of Additional Information
and sales literature to prospective investors; (ii) payments to registered
representatives and other persons who provide support services in connection
with the distribution of shares; (iii) overhead and other distribution related
expenses; and (iv) accruals for interest on the amount of the foregoing expenses
that exceed Rule 12b-1 distribution fees and the CDSC received by ALIAC.
SHAREHOLDER SERVICE PLAN. Under a shareholder services plan, ALIAC is paid
a service fee at an annual rate of 0.25% of the daily net assets of the Adviser
Class shares of each Portfolio. This fee is used as compensation for expenses
incurred in servicing shareholder accounts of Adviser Class shareholders.
ADMINISTRATOR. ALIAC also acts as administrator for both Portfolios. For
each Portfolio, ALIAC is paid a maximum administration fee of 0.25% on the first
$250 million in average daily net assets (0.24% on the next $250 million; 0.23%
on the next $250 million; 0.22% on the next $250 million; 0.20% on the next $1
billion; and 0.18% over $2 billion).
EXPENSE RATIOS. As of April 30, 1996, the Asian Growth Fund had total net
assets of $25,888,531 and the International Growth Fund had total net assets of
$41,256,398. For the six month period ended April 30, 1996, the annualized total
expense ratios (before waivers) for the Select Class and the Adviser Class
shares of the Asian Growth Fund were 2.29% and 3.04%, respectively. For the same
period, the annualized total expense ratios of the Select Class and the Adviser
Class of the International Growth Fund were 1.88% and 2.63%, respectively.
As of October 31, 1995, the total expense ratios (before waivers) for the
Select Class and Adviser Class shares of the Asian Growth Fund were 2.01% and
2.76%, respectively. As of the same date, the total expense ratios for the
Select Class and Adviser Class shares of the International Growth Fund were
1.50% and 2.25%, respectively.
Although the expenses actually borne by the Asian Growth Fund as of such
dates were reduced due to a fee waiver/ reimbursement arrangement implemented by
ALIAC, such arrangement is subject to termination at any time. See "Comparison
of Fees and Expenses," below.
DIVIDENDS AND DISTRIBUTIONS. The dividend and distribution policies of the
Portfolios are identical. Like the Asian Growth Fund, the International Growth
Fund has no fixed dividend rate and there can be no assurance that it will pay
any dividends or realize any gains. Dividends, if any, are generally declared
and paid annually. Income dividends are derived from investment income,
including dividends, interest, realized short-
25
<PAGE>
term capital gains, and certain foreign currency gains received by a Portfolio.
Capital gains distributions are derived from the Portfolio's realized long-term
capital gains. The per share dividends and distributions of Select Class shares
will be higher than the per share dividends and distributions of the Adviser
Class as a result of the distribution fees and service fees applicable to the
Adviser Class. With respect to each Portfolio, a shareholder's dividends and
distributions will be reinvested in full or fractional shares unless
instructions are given to the contrary at the time of the shareholder's initial
purchase of shares. The election may be changed by written notice which must be
received by the Transfer Agent at least 10 days prior to the next scheduled
distribution. There is no sales or other charge in connection with the
reinvestment of dividends and capital gains distributions.
PURCHASE PROCEDURES AND EXCHANGE PRIVILEGES/CONTINGENT DEFERRED SALES
CHARGE. The Portfolios have identical purchase procedures and exchange
privileges. Shares of both Portfolios are sold on a continuous basis at net
asset value. Adviser Class shares of both Portfolios are normally subject to a
CDSC on certain redemptions.
There is no CDSC on redemptions of Adviser Class shares purchased through
reinvestment of dividends or capital gains distributions or shares purchased
more than four years before the redemption. Redemptions of Adviser Class shares
within four years of purchase are normally subject to a CDSC. The charge is
assessed on an amount equal to the lesser of the current market value or the
original cost of the shares being redeemed.
No CDSC will be imposed in connection with a shareholder's participation in
the Reorganization (since the exchange of shares in connection with the
Reorganization is not considered to be a redemption for purposes of the CDSC),
and for purposes of the CDSC, the value and holding period of a shareholder's
Adviser Class shares of the Asian Growth Fund will be credited toward the CDSC
imposed on any subsequent redemptions of International Growth Fund shares
received in the Reorganization. In addition, for a 30-day period following the
Reorganization, the CDSC applicable to the Adviser Class shares will be waived
for all Asian Growth Fund shareholders who redeem their newly issued shares of
the International Growth Fund. Unless the Meeting is adjourned to a subsequent
date, the vote of shareholders on the proposed Reorganization will be rendered
on September 13, 1996. Shareholders may call ALIAC toll-free at 1-800- 238-6263
for information pertaining to action taken at the Meeting and the waiver of the
CDSC. The Fund reserves the right to discontinue the waiver of the CDSC in the
event that the Reorganization will not be consummated. Shareholders who wish to
redeem Asian Growth Fund shares prior to the Meeting will be subject to a CDSC
and should consider the impact of the CDSC on such redemption.
26
<PAGE>
REDEMPTION PROCEDURES. The Portfolios offer identical redemption features
pursuant to which proceeds of a redemption are remitted to shareholders, and
have the same minimum account balance requirement of $500 for each Portfolio
account.
GENERAL. Each Portfolio is a separate series of the Fund and, as such, has
identical rights under the Articles of Incorporation of the Fund and applicable
Maryland law. Shares of each Class of each Portfolio participate equally in
dividends and distributions from that Portfolio, including any distributions in
the event of a liquidation. Each share of a Portfolio is entitled to one vote
for all purposes. Shares of all series of the Fund vote for the election of
Directors and on any other matter that affects each Portfolio in substantially
the same manner as a single class, except as otherwise required by law. As to
matters affecting each Portfolio differently, such as approval of an investment
advisory agreement, shares of each Portfolio vote as a separate series. Maryland
law does not require registered investment companies, such as the Fund or its
series, to hold annual meetings of shareholders and it is anticipated that
shareholder meetings will be held only when specifically required by federal or
state law. Shareholders have available certain procedures for the removal of
Directors. The Fund indemnifies directors and officers to the fullest extent
permitted under Maryland law. The Directors and officers of the Fund
participate, along with other investment companies managed by ALIAC, in a joint
directors and officers liability insurance policy.
27
<PAGE>
ADDITIONAL INFORMATION
This Prospectus/Proxy Statement and the Related Statement of Additional
Information do not contain all of the information set forth in the registration
statement and the exhibits relating thereto filed by the Fund with the
Commission under the Securities Act of 1933 and the 1940 Act, to which reference
is hereby made. The Commission file numbers for the Prospectuses and Statements
of Additional Information that are incorporated by reference herein are Numbers
33-41694 and 811- 6352.
Information about each of the Portfolios is included in the Prospectus
dated March 1, 1996, and in the annual report of the Fund as of October 31,
1995, copies of which are enclosed herewith and incorporated by reference .
Additional information is included in the Statement of Additional Information
dated March 1, 1996, which has been filed as part of the related Statement of
Additional Information of this Combined Proxy Statement and Prospectus, dated
August 12, 1996 and is incorporated by reference.
Both Portfolios file proxy material, reports and other information with the
Commission. These documents and other information can be inspected and copied at
the Public Reference Facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board for the Meeting. It is expected that the
solicitation of proxies will be primarily by mail. Representatives of ALIAC and
its affiliates, and the Fund and service contractors retained by the Fund, may
contact shareholders directly to discuss the proposals set forth herein, and may
also solicit proxies by telephone, telegraph or personal interview. ALIAC or its
affiliates will bear the cost of solicitation of proxies. It is anticipated that
banks, broker-dealers and other institutions will be requested to forward proxy
materials to beneficial owners and to obtain authorization for the execution of
proxies. ALIAC or its affiliates may, upon request, reimburse banks,
broker-dealers and other institutions for their expenses in forwarding proxy
materials to beneficial owners.
Only shareholders of record of the Asian Growth Fund at the close of
business on August 2, 1996 (the "Record Date"),
28
<PAGE>
will be entitled to vote at the Meeting. As of the Record Date, there were
__________ shares of the Asian Growth Fund issued and outstanding. As of August
2, 1996, no person other than ALIAC and its affiliates) owned of record or
beneficially 5% or more of the outstanding shares of either class of shares of
the Asian Growth Fund.
ALIAC and Aetna Life Insurance Company ("ALIC") each owned of record at
least 25% of the outstanding shares of the Asian Growth Fund as of the Record
Date and therefore could be deemed to be a controlling person of the Asian
Growth Fund under the 1940 Act. Some of the shares are owned of record by ALIAC,
in its Separate Account F, as depositor for variable annuity contracts. Under
the terms of the variable annuity contracts, contract holders have the right to
instruct ALIAC how to vote the shares related to their interests.
ALIAC and ALIC have both advised the Asian Growth Fund that each intends to
vote the shares over which it has voting power, other than shares held in
Separate Account F, at the Meeting in the same proportion as the votes cast by
other shareholders (those that are unaffiliated with ALIAC). ALIAC will only
vote shares of the Asian Growth Fund held through ALIAC's Separate Account F for
which it receives instructions and will not vote shares for which no
instructions are received.
If the accompanying proxy is executed and returned in time for the Meeting,
the shares covered thereby will be voted in accordance with the instructions
thereon. In the absence of any instructions, such proxy will be voted to approve
the Reorganization and the Charter Amendment. Any shareholder giving a proxy may
revoke it at any time before the Meeting by submitting to the Fund a written
notice of revocation or a subsequently executed proxy, or by attending the
Meeting and voting in person.
If a proxy represents a broker "non-vote" (that is, a proxy from a broker
or nominee indicating that such person has not received instructions from the
beneficial owner or other person entitled to vote shares on a particular matter
with respect to which the broker or nominee does have discretionary power) or
marked with an abstention (collectively, "abstentions"), the shares represented
thereby will be considered to be present at the meeting for purposes of
determining the existence of a quorum for the transaction of business.
QUORUM AND ADJOURNMENTS
A quorum is constituted by the presence in person or by proxy of the
holders of a majority of the total number of shares outstanding and entitled to
vote, with respect to the Asian Growth Fund. If a quorum is not present at the
Meeting, or if a quorum is present but sufficient votes to approve the
Reorganization are not received, the persons named as proxies may
29
<PAGE>
propose one or more adjournments of the Meeting to permit further solicitation
of proxies (but not more than 120 days after the original record date). In
determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the Meeting, the
percentage of votes actually cast, the percentage of negative votes actually
cast, the nature of any further solicitation and the information to be provided
to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. The persons named as proxies
will vote for or against an adjournment based on their determination of what is
in the best interests of the shareholders, taking into consideration the factors
discussed above. A shareholder vote may be taken prior to any adjournment if
sufficient votes have been received for approval.
APPRAISAL RIGHTS
The Articles of Incorporation of the Fund do not grant shareholders any
rights of share appraisal. Shareholders have the right to redeem their shares of
the Asian Growth Fund at net asset value at any time until the close of business
on the business day prior to the Closing Date of the Reorganization and,
thereafter, shareholders may redeem from the International Growth Fund the
International Growth Fund shares acquired by them in the Reorganization.
OTHER BUSINESS
The Board of Directors of the Fund knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting,
proxies that do not contain specific restrictions to the contrary will be voted
on such matters in accordance with the judgment of the persons named as Proxies.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the Commission under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), Shareholders may request inclusion in
the Fund's proxy statement for an annual meeting of shareholders proposals that
they intend to introduce at such meeting. Any such proposals must be presented a
reasonable time before the proxy materials for the next meeting are sent to
shareholders. The submission of a proposal does not guarantee its inclusion in
the proxy statement and is subject to limitations under the 1934 Act. The Fund
does not hold annual meetings of shareholders. For this reason, no anticipated
date of the next meeting, if any, can be provided.
THE BOARD OF DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, OF
AETNA SERIES FUND, INC. RECOMMEND APPROVAL OF THE PLAN AND THE RELATED CHARTER
AMENDMENT.
30
<PAGE>
MISCELLANEOUS
FINANCIAL STATEMENTS.
The financial statements of the Portfolios incorporated by reference in the
Related Statement of Additional Information relating to this Prospectus/Proxy
Statement have been audited by KPMG Peat Marwick LLP, independent accountants,
for the periods indicated in their report thereon, which is included in the
annual report to shareholders for the year ended October 31, 1995. In addition,
the unaudited financial statements for the six month period ended April 30, 1996
were mailed to shareholders on or about June 30, 1996.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY AETNA SERIES FUND, INC. OR ALIAC. THIS
PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
IN WHICH SUCH AN OFFERING MAY NOT LAWFULLY BE MADE.
31
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
Pro Forma Schedule of Investments
As of April 30, 1996
(unaudited)
- ------------------------------------------------------------------------------------------------------------
INTERNATIONAL INTERNATIONAL ASIAN GROWTH ASIAN PRO FORMA
COUNTRY GROWTH ASSETS GROWTH % ASSETS GROWTH % ASSETS PRO FORMA %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina $373,750 0.9% - - $373,750 0.6%
Australia 634,414 1.5% - - 634,414 0.9%
Austria 644,252 1.6% - - 644,252 1.0%
Belgium 581,041 1.4% - - 581,041 0.9%
Canada 1,295,715 3.1% - - 1,295,715 1.9%
Denmark 849,471 2.1% - - 849,471 1.3%
Finland 1,353,222 3 .3 - - 1,353,222 2.0%
France 1,697,373 4.0% - - 1,697,373 2.5%
Hong Kong 1,755,484 4.3% $8,759,880 33.8% 10,515,364 15.7%
Indonesia 1,062,191 2.6% 1,988,591 7.7% 3,050,782 4.5%
Ireland 311,584 0.8% - - 311,584 0.5%
Italy 1,628,253 3.9% - - 1,628,253 2.4%
Japan 10,475,321 25.4% - - 10,475,321 15.6%
Kenya 379,125 0.9% - - 379,125 0.6%
Malaysia 1,182,744 2.9% 5,022,822 19.4% 6,205,566 9.2%
Mexico 497,375 1.2% - - 497,375 0.7%
Netherlands 1,762,849 4.3% - - 1,762,849 2.6%
Norway 1,294,801 3.1% - - 1,294,801 1.9%
New Zealand - - - - - -
Philippines 641,051 1 .6 1,441,604 5.6% 2,082,655 3.1%
Singapore 879,807 2.1% 1,755,121 6.8% 2,634,928 3.9%
South Korea 499,500 1.2% 1,280,838 4.9% 1,780,338 2.6%
Spain 676,956 1.6% - - 676,956 1.0%
Sweden 898,916 2.2% - - 898,916 1.3%
Switzerland 909,195 2.2% - - 909,195 1.4%
Taiwan 178,400 0.4% - - 178,400 0.3%
Thailand 516,040 1.3% 3,905,918 15.1% 4,421,958 6.6%
United Kingdom 3,867,249 9.4% - - 3,867,249 5.8%
West Germany 2,431,047 5.9% - - 2,431,047 3.6%
United States
(short term) 1,287,628 3.1% 1,374,000 5.3% 2,661,628 4.0%
Other assets less
liabilities 691,644 1.7% 359,757 1.4% 1,051,401 1.6%
----------- ----- ----------- ----- ------------- -------
Total Net $41,256,398 100.0% $25,888,531 100.0% $67,144,929 100.0%
Assets
</TABLE>
All amounts indicated in U.S. Dollars.
32
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION AND LIQUIDATION
THIS PLAN OF REORGANIZATION AND LIQUIDATION (the "Plan") is adopted by Aetna
Series Fund, Inc. a Maryland corporation (the "Fund"), on behalf of two of its
portfolios, the Aetna Asian Growth Fund and the Aetna International Growth Fund
(the "Portfolios") as of April 30, 1996.
W I T N E S S E T H :
WHEREAS, the Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, this Plan is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended, such reorganization to consist of the transfer
of all of the assets of the Asian Growth Fund in exchange for shares of stock,
par value $0.001 per share, of the International Growth Fund ("International
Growth Fund Shares"), the assumption by the International Growth Fund of stated
liabilities of the Asian Growth Fund, and the distribution, after the Closing
(as defined in Section (5) of International Growth Fund Shares to the
shareholders of the Asian Growth Fund in liquidation of the Asian Growth Fund,
all upon the terms and conditions hereinafter set forth in this Plan; and
WHEREAS, the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons of the Fund, within the meaning of the
1940 Act, has determined with regard to each Portfolio that participating in the
transactions contemplated by this Plan is in the best interests of the
Portfolios and that the interests of shareholders of the Portfolios will not be
diluted as a result of such transactions.
NOW, THEREFORE, the Board of Directors of the Fund hereby adopts and declares
the following Plan:
1. TRANSFER OF ASSETS. Subject to the terms and conditions set forth herein, at
the Closing the Fund shall transfer all of the assets of the Asian Growth Fund
to the International Growth Fund, and in consideration therefor, the
International Growth Fund shall assume all of the Liabilities (as defined
herein), and issue to the Fund, on behalf of the Asian Growth Fund,
International Growth Fund Shares (the "New Shares") having an aggregate net
asset value equal to the value of the assets of the Asian Growth Fund
transferred less the Liabilities assumed. "Liabilities" shall mean the
liabilities and obligations reflected in an unaudited statement of assets and
liabilities of the Asian Growth Fund as of the close of business on the
33
<PAGE>
Valuation Date (as hereinafter defined), determined in accordance with generally
accepted accounting principles consistently applied from the Asian Growth Fund's
most recently completed audit period. The net asset value of the New Shares and
the value of the net assets of the Asian Growth Fund to be transferred shall be
determined as of the close of regular trading on the New York Stock Exchange on
the business day next preceding the Closing (the "Valuation Date") using the
valuation procedures set forth in the then current prospectus and statement of
additional information of the International Growth Fund.
The International Growth Fund shall assume only the Liabilities, and no other
liabilities or obligations, whether absolute or contingent, known or unknown,
accrued or unaccrued. All Liabilities that exist at or after the Closing shall,
after the Closing, attach to the International Growth Fund and may be enforced
against the International Growth Fund to the same extent as if the same had been
incurred by the International Growth Fund.
2. LIQUIDATION OF THE ASIAN GROWTH FUND. Upon the consummation of the
transactions referred to in Section 1, the New Shares will be issued to the
Fund, to be credited to the accounts of shareholders of record of the Asian
Growth Fund at the close of business on the Valuation Date. At or as soon as
practicable after the Closing, the New Shares will be distributed to such
shareholders in exchange for and in liquidation and cancellation of the shares
of the Asian Growth Fund, each such shareholder to receive the number of New
Shares that is equal in dollar amount to the value of shares of beneficial
interest of the Asian Growth Fund held by such shareholder as of the close of
business on the Valuation Date. Such distribution will be accomplished by the
establishment of an open account on the share records of the International
Growth Fund in the name of each shareholder of the Asian Growth Fund and
representing the respective number of New Shares due such shareholder. For these
purposes, the shareholders of record of the Asian Growth Fund as of the close of
business on the Valuation Date shall be certified by the Fund's transfer agent.
The transactions contemplated in Section 1 and above in this Section 2 shall be
effected on a class by class basis, by the delivery of New Shares of the Adviser
Class and Select Class of the International Growth Fund to the Fund and the pro
rata distribution of those shares to Adviser Class and Select Class
shareholders, respectively, of the Asian Growth Fund, so that the Adviser Class
and Select class shareholders of the Asian Growth Fund will become Adviser Class
and Select Class shareholders, respectively, of the International Growth Fund
and receive the same dollar amount in New Shares of the Adviser Class or Select
Class, as the case may be, as was held in such class of shares of the Asian
Growth Fund at the close of business on the Valuation Date.
34
<PAGE>
The Fund shall file on behalf of the Asian Growth Fund such instruments of
dissolution, if any, as are necessary to effect the dissolution of the Asian
Growth Fund and shall take all other steps necessary to effect a complete
liquidation and dissolution of the Asian Growth Fund, which may include (or
consist exclusively of) the filing of the Articles of Amendment referred to in
Section 6, below.
3. REPRESENTATIONS AND WARRANTIES.
(a) The Fund, on behalf of the Asian Growth Fund, hereby represents and
warrants to the International Growth Fund as follows:
(i) the Fund is duly organized, validly existing and in good standing
under the laws of the State of Maryland and has full power and authority to
conduct its business as presently conducted;
(ii) the Fund has full power and authority to execute, deliver and
carry out the terms of this Plan on behalf of the Asian Growth Fund;
(iii) the execution and delivery of this Plan on behalf of the Asian
Growth Fund and the consummation of the transactions contemplated hereby are
duly authorized and no other proceedings on the part of the Fund or the
shareholders of the Asian Growth Fund (other than as contemplated in Section
4(f) are necessary to authorize this Plan and the transactions contemplated
hereby;
(iv) this Plan has been duly executed by the Fund on behalf of the
Asian Growth Fund and constitutes its valid and binding obligation, enforceable
in accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other rights affecting creditors' rights generally,
and general equitable principles;
(v) neither the execution and delivery of this Plan by the Fund on
behalf of the Asian Growth Fund, nor the consummation by the Fund on behalf of
the Asian Growth Fund of the transactions contemplated hereby will conflict
with, result in a breach or violation of or constitute (or with notice, lapse of
time or both constitute) a breach of or default under, the Articles of
Incorporation or By-Laws of the Fund, or any statute, regulation, order,
judgment or decree or any instrument, contract or other agreement to which the
Fund is a party or by which the Fund or any of its assets is subject or bound;
and
(vi) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary for the execution
and delivery of this Plan by the Fund on behalf of the Asian Growth Fund or the
consummation of
35
<PAGE>
any transactions contemplated hereby the Fund, other than as shall be obtained
at or prior to the closing.
(b) The Fund, on behalf of the International Growth Fund, hereby represents
and warrants to the Asian Growth Fund as follows:
(i) The Fund, on behalf of the International Growth Fund, hereby
represents and warrants to the Asian Growth Fund as follows:
(ii) The Fund has full power and authority to execute, deliver and
carry out the terms of this Plan on behalf of the International Growth Fund;
(iii) the execution and delivery of this Plan on behalf of the
International Growth Fund and the consummation of the transactions contemplated
hereby are duly authorized and no other proceedings on the part of the Fund or
the shareholders of the International Growth Fund are necessary to authorize
this Plan and the transactions contemplated hereby;
(iv) this Plan has been duly executed by the Fund on behalf of the
International Growth Fund and constitutes it s valid and binding obligation,
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting creditors'
rights generally, and general equitable principles;
(v) neither the execution and delivery of this Plan by the Fund on
behalf of the Asian Growth Fund, nor the consummation by the Fund on behalf of
the Asian Growth Fund of the transactions contemplated hereby will conflict
with, result in a breach or violation of or constitute (or with notice, lapse of
time or both constitute) a breach of or default under, the Articles of
Incorporation or By-Laws of the Fund, or any statute, regulation, order,
judgement or decrease or any instrument, contract or other agreement to which
the Fund is a party or by which the Fund or any of its assets is subject or
bound; and
(vi) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary for the execution
and delivery of this Plan by the Fund, other than as shall e obtained at or
prior to the closing.
4. CONDITIONS PRECEDENT. The obligations of the Fund to effectuate the Plan of
Reorganization and Liquidation hereunder shall be subject to the satisfaction of
the following conditions:
(a) At or immediately prior to the Closing, the Fund shall have declared
and paid a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of the
Asian Growth Fund all of the Portfolio's investment company
36
<PAGE>
taxable income for taxable years ending at or prior to the Closing
(computed without regard to any deduction for dividends paid) and all of
its net capital gain, if any, realized in taxable years ending at or prior
to the closing (after reduction for any capital loss carry-forward);
(b) Such authority and orders from the Securities and Exchange Commission
(the "Commission") and state securities commissions as may be necessary to
permit the Fund to carry out the transactions contemplated by this Plan
shall have been received;
(c) A registration statement of the Fund on Form N-14 under the Securities
Act of 1933, as amended (the "Securities Act"), and such amendment or
amendments thereto as are determined by the Board of directors of the Fund
to be necessary and appropriate to effect such registration of the New
Shares (the "Registration Statement"), shall have been filed with the
Commission and shall have become effective, and no stop-order suspending
the effectiveness of such Registration Statement shall have been issued,
and no proceeding for that purpose shall have been initiated or threatened
by the Commission (unless withdrawn or terminated);
(d) The New Shares shall have been duly qualified for offering to the
public in all states in which such qualification required for consummation
of the transactions contemplated hereunder.
(e) The Board of Directors of the Fund shall have received a legal opinion
from outside counsel, in form and substance reasonably satisfactory to the
Board of Directors of the Fund, as to tax and corporate matters related to
this Plan, including, without limitation, that the proposed reorganization
will not result in any taxable gain or loss to the Asian Growth Fund or its
shareholders; and
(f) This Plan and the proposed reorganization contemplated hereby shall
have been approved by shareholders of the Asian Growth Fund in accordance
with the 1940 Act and Maryland law, at a meeting of shareholders of the
Asian Growth Fund to be duly called for such purpose.
5. CLOSING. The Closing shall be held at the offices of the Fund and shall occur
as of the commencement of business on (a) August 30, 1996, or (b) if all
regulatory or shareholder approvals shall not have been received by such date,
then on the first Monday following receipt of all necessary regulatory approvals
and the final adjourned meeting of shareholders of the Asian Growth Fund at
which this Plan is considered and approved, or (c) such later time as the Fund
may determine, giving consideration to the best interests of the Portfolios. All
acts
37
<PAGE>
taking place at the Closing shall deemed to take place simultaneously unless
otherwise provided.
6. ARTICLES OF AMENDMENT. For purposes of Maryland corporation law, the
transactions contemplated by this Plan will be effectuated by Articles of
Amendment, substantially in the form attached hereto as Exhibit A, which will
amend the Articles of Incorporation of the Fund to provide, among other things,
that all shares of the Asian Growth Fund will be exchanged for, and converted
and reclassified into, New Shares.
7. EXPENSES. The expenses of the transactions contemplated by this Plan shall be
borne by Aetna Life Insurance and Annuity Company or an affiliate thereof,
whether or not the transactions contemplated hereby are consummated.
8. TERMINATION. This Plan and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Directors of the Fund, at
any time prior to the Closing, if circumstances should develop that, in the
opinion of the Board, in its sole discretion, make proceeding with this Plan
inadvisable for either Portfolio. In the event of any such termination, there
shall be no liability for damages on the part of either Portfolio, or its agent
or officers, to the other Portfolio, or its agents or officers.
9. AMENDMENTS. This Plan may be amended, waived or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the Fund
with respect to either Portfolio; provided, however, that following the meeting
of the Asian Growth Fund shareholders called by the Fund pursuant to Section
4(f) of this Plan, no such amendment, waiver or supplement may have the effect
of changing the provisions for determining the amount of International Growth
Fund Shares to be issued to the Asian Growth Fund shareholders under this Plan,
or otherwise to the detriment of such shareholders, without their further
approval.
10. GOVERNING LAW. This Plan shall be governed and construed in accordance with
the laws of Maryland, without giving effect to the conflicts of laws provisions
thereof.
11. FURTHER ASSURANCES. The Fund, with respect to the Asian Growth Fund and the
International Growth Fund, shall take such further action, prior to, at, and
after the Closing, as may be necessary or desirable and proper to consummate the
transactions contemplated hereby.
38
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of the Fund has caused this Plan to
be executed on behalf of each Portfolio as of the date first set forth above by
their duly authorized representatives.
AETNA SERIES FUND, INC.
on behalf of Aetna Asian Growth Fund
Attest:
By:______________________________
- ----------------
AETNA SERIES FUND, INC.
on behalf of Aetna International Growth
Fund
Attest:
By:___________________________
- ------------------
39
<PAGE>
EXHIBIT A TO THE PLAN OF REORGANIZATION
AND LIQUIDATION
AETNA SERIES FUND, INC.
ARTICLES OF AMENDMENT
AETNA SERIES FUND, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940 and having its
principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter referred to as the "Corporation") hereby certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: In connection with and in furtherance of a plan of reorganization
and liquidation of the Aetna Asian Growth Fund, a separate fund and series of
stock of the Corporation (the "Asian Growth Fund"), the Corporation hereby
amends its Charter as currently in effect, consisting of Articles of
Incorporation filed with the Department on June 17, 1991 (the "Articles of
Incorporation"), Articles Supplementary filed with the Department on September
27, 1993 (the "September 27, 1993 Articles Supplementary"), Articles
Supplementary filed with the Department on November 1, 1993 (the "November 1,
1993 Articles Supplementary"), and Articles Supplementary filed with the
Department on September 27, 1994 (the "September 27, 1994 Articles
Supplementary") to include the following:
A. As of the Effective Date (as hereinafter defined):
(i) all assets belonging to the Asian Growth Fund shall be transferred
to, and become assets belonging to, the Aetna International Growth Fund, a
separate fund and series of stock of the Corporation (the "International Growth
Fund") and all liabilities and obligations reflected in the unaudited statement
of assets and liabilities of the Asian Growth Fund as of the close of business
on the business day immediately preceding the Effective Date (the "Valuation
Date") shall be assumed by, and become liabilities belonging to, the
International Growth Fund.
(ii) each unissued Class A Share of the Aetna Asian Growth Fund series
of stock of the Corporation, par value $0.001 per Share ("Class A Asian Growth
Fund Shares") shall be reclassified into one unissued Class A Share of the
International Growth Fund Series of stock of the Corporation, par value $0.001
per share ("Class A International Growth Fund Shares"), and each unissued Class
B Share of the Asian Growth Fund series of stock of the Corporation, par value
$0.001 per share ("Class B Asian Growth Fund Shares") shall be reclassified into
one unissued Class B Share of the International Growth Fund Series of Stock of
the Corporation ("Class B International Growth Fund Shares"). The Class A Asian
Growth Fund Shares and the Class B Asian Growth Fund Shares are hereinafter
sometimes collectively referred to as "Asian Growth Fund Shares" and the Class A
International Growth
40
<PAGE>
Fund Shares and the Class B International Growth Fund Shares are sometimes
hereinafter referred to collectively as "International Growth Fund Shares."
(iii) all issued and outstanding Class A Asian Growth Fund Shares
(including fractional shares, if any), shall be exchanged for and converted and
reclassified into Class A International Growth Fund Shares and all issued and
outstanding Class B Asian Growth Fund Shares (including fractional shares, if
any), shall be exchanged for and reclassified into Class B International Growth
Fund Shares at the Conversion Rate Per Asian Growth Fund Share (as hereinafter
defined). For purposes hereof, the Conversion Rate Per Asian Growth Fund Share
shall be the number or fraction which is equal to: (a) the number of
International Growth Fund Shares having an aggregate net value equal to the
value of the net assets belonging to the Asian Growth Fund transferred to the
International Growth Fund (the "New Shares"); divided by (b) the number of
issued and outstanding Asian Growth Fund Shares; and each Asian Growth Fund
Share shall be exchanged, converted and reclassified for and into a number of
International Growth Fund Shares (and/or fractional shares, if any) equal to the
Conversion Rate Per Asian Growth Fund Share. The net asset value of the New
Shares and the value of the net assets of the Asian Growth Fund transferred to
the International Growth Fund shall be determined as of the close of regular
trading on the New York Stock Exchange on the Valuation Date using the valuation
procedures set forth in the then current prospectus and statement of additional
information of the International Growth Fund. Such exchange, conversion and
reclassification of all of the issued and outstanding Asian Growth Fund Shares
for and into International Growth Fund Shares will take place on the Effective
Date automatically and without further action on the part of the Corporation.
B. Upon the exchange, conversion and reclassification of all of the issued
and outstanding Asian Growth Fund Shares for and into International Growth Fund
Shares, all issued and outstanding Asian Growth Fund Shares shall be deemed
canceled and the provisions of the Charter set forth in the November 1, 1993
Articles Supplementary designating and classifying shares of stock of the
Corporation into the Asian Growth Fund Shares, establishing and describing the
preferences, rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Asian Growth Fund
Shares and the description, and terms and conditions, of various classes of
Asian Growth Fund Shares shall be deleted from the Charter of the Corporation.
SECOND: The amendments to the Charter of the Corporation herein set forth
were duly advised by the Board of Directors of the Corporation and approved by
the Stockholders entitled to vote thereon, as required by the Charter and Bylaws
of the Corporation and applicable law.
41
<PAGE>
THIRD: The amendments set forth herein do not increase the authorized
capital stock of the Corporation.
FOURTH: The amendments set forth herein shall become effective and all of
the issued and outstanding Asian Growth Fund Shares shall be exchanged for and
converted and reclassified into International Growth Fund Shares, as provided
herein, as of the close of business on the date (the "Effective Date") which is
the later of: (i) August 30, 1996; and (ii) the date on which these Articles of
Amendment, having been duly advised, approved, signed, acknowledged and sealed
by the Corporation as required by the laws of the State of Maryland and not
having been abandoned prior to the Effective Date by majority vote of the entire
Board of Directors of the Corporation, are filed for record with the Department.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be executed in its name and on its behalf by its undersigned President and
witnessed or attested to by its undersigned Secretary as of this _______ day of
___________________, 1996 and its undersigned President acknowledges that these
Articles of Amendment are the act and deed of the Corporation and, under
penalties of perjury, that the matters and facts set forth herein are true in
all material respects to the best of his knowledge, information and belief.
ATTEST: AETNA SERIES FUND, INC.
By:___________________________ By:____________________________
Name: Name:
Title: Title:
42
<PAGE>
PART B
Related Statement of Additional Information
AETNA SERIES FUND, INC.
This Related Statement of Additional Information is not a prospectus but
should be read in conjunction with the Combined Proxy Statement/Prospectus dated
August 12, 1996, which may be obtained from Aetna Series Fund, Inc. (the
"Fund"), 151 Farmington Avenue, Hartford, Connecticut 06156. Further information
about the Aetna Asian Growth Fund and Aetna International Growth Fund is
contained in and incorporated by reference to the Statement of Additional
Information of the Fund dated March 1, 1996. Incorporated by reference herein
are: The audited financial statements of the Asian Growth Fund and International
Growth Fund for the period ended October 31, 1995.
The pro forma combined statement of assets and liabilities reflects the
financial position of International Growth Fund at April 30, 1996 as though the
Reorganization occurred as of that date. The pro forma combined statement of
operations reflects the results of operations of the International Growth Fund
and Asian Growth Fund for the period ended April 30, 1996 as though the
Reorganization occurred at the beginning of the period presented.
43
<PAGE>
<TABLE>
<CAPTION>
AETNA INTERNATIONAL GROWTH FUND
AETNA ASIAN GROWTH FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
INTERNATIONAL ASIAN PRO FORMA
GROWTH FUND GROWTH FUND COMBINED
----------- ----------- --------
ASSETS:
<S> <C> <C> <C>
Investments, at market value $40,564,754 $ 25,528,774 $66,093,528
Cash 49 605 654
Cash denominated in foreign currencies 424,565 394,002 818,567
Receivable for:
Dividends and interest 165,997 130,025 296,022
Investments sold 1,133,759 869,300 2,003,059
Fund shares sold 177,373 454 177,827
Recoverable taxes 55,728 2,709 58,437
Reimbursement from Investment Adviser 0 21,787 21,787
Gross unrealized gain on forward foreign currency
exchange contracts 248,107 0 248,107
Deferred organizational expenses 11,461 0 11,461
----------- ------------ -----------
Total assets $42,781,793 $ 26,947,656 $69,729,449
----------- ------------ -----------
LIABILITIES:
Payable for:
Investments purchased 1,189,552 1,028,402 2,217,954
Fund shares redeemed 134,276 0 134,276
Variation margin 2,919 0 2,919
Other liabilities 69,421 30,723 100,144
Gross unrealized loss on forward foreign currency
exchange contracts 129,227 0 129,227
----------- ------------ -----------
Total liabilities 1,525,395 1,059,125 2,584,520
----------- ------------ -----------
NET ASSETS $41,256,398 $ 25,888,531 $67,144,929
=========== ============ ===========
NET ASSETS REPRESENTED BY:
Paid-in capital $34,581,177 $ 24,864,939 $59,446,116
Unrealized gain on investments 3,373,392 3,652,944 7,026,336
Undistributed net investment income 66,191 93,479 159,670
Accumulated net realized gain (loss) on investments 3,235,638 (2,722,831) 512,807
----------- ------------ -----------
Total - representing net assets applicable to
outstanding fund shares $41,256,398 $ 25,888,531 $67,144,929
=========== ============ ===========
CAPITAL SHARES, $.001 PAR VALUE (NOTE 2)
Select Class:
Outstanding 1,684,648 2,694,284 3,857,808
Net Assets 19,596,926 25,273,846 44,870,772
Net Asset Value per share 11.63 9.38 11.63
Adviser Class:
Outstanding 1,866,272 65,695 1,919,216
Net Assets 21,659,472 614,685 22,274,157
Net Asset Value per share 11.61 9.36 11.61
Cost of Investments $37,361,362 $ 21,877,527 $59,238,889
=========== ============ ===========
</TABLE>
See Notes to Pro Forma Combining Financial Statements
44
<PAGE>
<TABLE>
<CAPTION>
AETNA INTERNATIONAL GROWTH FUND
AETNA ASIAN GROWTH FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
SIX MONTH PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
INTERNATIONAL ASIAN PRO FORMA PRO FORMA
GROWTH FUND GROWTH FUND ADJUSTMENTS COMBINED
----------- ----------- ----------- --------
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Dividends $393,581 $237,753 $631,334
Interest 36,446 43,835 80,281
--------- -------- ---------
430,027 281,588 711,615
Foreign taxes withheld (50,693) (16,196) (66,889)
--------- --------- ---------
Total investment income 379,334 265,392 644,726
-------- -------- ---------
INVESTMENT EXPENSES: (NOTE 2)
Investment advisory fee 181,799 121,145 ($18,122) 284,822
Administrative service fee 53,470 30,286 83,756
12b-1 and service fees 84,172 2,360 86,532
Organizational expenses 4,273 0 4,273
Printing and Postage 16,284 7,622 (3,500) 20,406
Custody fees 84,020 76,651 (41,000) 119,671
Transfer agent fees 23,037 17,098 (8,000) 32,135
Audit fees 6,307 4,578 (5,000) 5,885
Directors' fees 3,847 3,460 7,307
State and federal fees 23,158 14,113 37,271
Miscellaneous 4,615 2,088 6,703
--------- -------- --------- ----------
Expenses before reimbursement and waiver
from Adviser 484,982 279,401 (75,622) 688,761
Expense reimbursement and waiver from
Adviser 0 (89,258) 89,258 0
---------- -------- -------- ----------
Net investment expenses 484,982 190,143 13,636 688,761
--------- -------- -------- ---------
Net investment income (loss) (105,648) 75,249 (13,636) (44,035)
--------- --------- -------- ---------
REALIZED AND UNREALIZED GAIN (LOSS):
Realized gain (loss) on:
Sales of investments (excluding short-term
investments) 2,382,029 512,550 2,894,579
Futures and forward currency contracts 981,844 (21,732) 960,112
Foreign currencies (47,468) (4,243) (51,711)
--------- --------- ---------
Net realized gain 3,316,405 486,575 3,802,980
---------- --------- ----------
Net change in unrealized gain (loss) on:
Investments 1,792,389 2,411,174 4,203,563
Futures and forward currency contracts 171,872 0 171,872
Foreign currency related transactions (2,762) (402) (3,164)
--------- --------- ---------
Net change in unrealized gain 1,961,499 2,410,772 4,372,271
---------- ---------- ----------
Net realized and change in unrealized
gain on investments 5,277,904 2,897,347 8,175,251
---------- ---------- ----------
Increase (decrease) in net assets resulting
from operations $5,172,256 $2,972,596 ($13,636) $8,131,216
========== ========== ======== ==========
</TABLE>
See Notes to Pro Forma Combining Financial Statements
45
<PAGE>
<TABLE>
<CAPTION>
AETNA INTERNATIONAL GROWTH FUND
AETNA ASIAN GROWTH FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (CONTINUED)
SIX MONTH PERIOD ENDED APRIL 30, 1996 (UNAUDITED)
PRO FORMA ADJUSTMENTS
OUTSTANDING SHARES
Select Class shares after merger:
(Asian Growth Fund Select Class Net Assets/International Growth Fund Select Class NAV)
+ International Growth Fund Select Class shares outstanding
<S> <C>
($25,273,846/11.63) 2,173,160
International Growth Fund Select Class shares outstanding 1,684,648
---------
Total 3,857,808
=========
Adviser Class shares after merger:
(Asian Growth Fund Adviser Class Net Assets/International Growth Fund Adviser Class NAV)
+International Growth Fund Adviser Class shares outstanding
($614,685/11.61) 52,944
International Growth Fund Adviser Class shares outstanding 1,866,272
---------
Total 1,919,216
=========
INVESTMENT ADVISORY FEE
Average Net Assets - Asian Growth Fund $24,295,617
International Growth Fund Advisory Fee less Asian Growth Fund Advisory Fee
(annual fees .85% and 1.00%) -0.15%
--- ---- ----------
Pro Rata Advisory Fee reduction ($18,122)
==========
PRINTING AND POSTAGE
Estimate of savings by avoiding certain composition, printing and paper costs. ($3,500)
==========
CUSTODY FEES
Elimination of Asian Growth Fund accounting service fees and certain custody and
custody transaction fees ($41,000)
==========
TRANSFER AGENT FEES
Elimination of certain Asian Growth Fund account service fees ($8,000)
===========
AUDIT FEES
Elimination of Asian Growth Fund audit fees ($5,000)
===========
REIMBURSEMENT AND WAIVER FROM ADVISER:
Reversal of expense reimbursement $ 89,258
===========
</TABLE>
See Notes to Pro Forma Combining Financial Statements
46
<PAGE>
AETNA INTERNATIONAL GROWTH FUND (INTERNATIONAL GROWTH FUND)
PROPOSED MERGER WITH
AETNA ASIAN GROWTH FUND (ASIAN GROWTH FUND)
Notes to Pro Forma Combining
Financial Statements (Unaudited)
1. Basis of Combination
Effective September 29, 1995 International Growth Fund and Asian Growth Fund
(collectively, the Funds) entered into an Agreement and Plan of Reorganization
("Agreement") whereby, subject to approval by the shareholders of Asian Growth
Fund, International Growth Fund will acquire the assets and assume the
liabilities of Asian Growth Fund. This merger of the Funds will be accounted for
by the pooling-of-interests method of accounting. The pro forma combining
statement of assets and liabilities reflects the financial position of
International Growth Fund and Asian Growth Fund at April 30, 1996 as though the
merger occurred as of that date. The pro forma combining statement of operations
reflects the results of operations of International Growth Fund and Asian Growth
Fund for the six month period ended April 30, 1996 as though the merger occurred
at the beginning of the period presented.
The pro forma combining financial statements reflect the estimated expenses of
both Funds. They consist of management's estimates of investment advisory fees,
printing and postage, custody fees, transfer agent fees and audit fees as a
result of the proposed merger.
2. Capital Shares
The number of additional shares of International Growth Fund issued pursuant to
the Agreement was calculated by dividing the net assets of each class of Asian
Growth Fund by the net asset value per share of the corresponding class of
International Growth Fund ($11.63 and $11.61 for the Select Class and Adviser
Class, respectively). The pro forma combined number of shares of each class of
International Growth Fund at April 30, 1996 is as follows: 3,857,808 for the
Select Class consisting of 1,684,648 shares outstanding at April 30, 1996 and
2,173,160 shares issued pursuant to the Agreement; 1,919,216 for the Adviser
Class consisting of 1,866,272 shares outstanding at April 30, 1996 and 52,944
shares issued pursuant to the Agreement.
3. Pro Forma Operating Expenses
Certain expenses have been adjusted in the Pro Forma Combining Statement of
Operations to reflect the expenses of the combined entity more closely. Pro
forma operating expenses include the actual expenses of International Growth
Fund and Asian Growth Fund, adjusted for certain items which are factually
supportable. These adjustments relate to investment advisory fees and other
operating expenses which have been recomputed using the rates and the combined
average net asset values of the Funds existing during the six month period ended
April 30, 1996.
47
<PAGE>
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
AETNA SERIES FUND, INC.
Asian Growth Fund
PART C
Item 15. Indemnification.
Article 9, Section (d) of the Registrant's Articles of Incorporation,
incorporated herein by reference to Exhibit 24(b)(1) to Registrant's
Registration Statement on Form N-1A (File No. 33-85620), as filed electronically
on June 28, 1995, provides for indemnification of directors and officers. In
addition, the Registrant's officers and directors are covered under a directors
and officers errors and omissions liability insurance policy issued by Gulf
Insurance Company which expires on October 1, 1996.
Reference is also made to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of Maryland which provides generally that (1) a
corporation may (but is not required to) indemnify its directors for judgments,
fines and expenses in proceedings in which the director is named a party solely
by reason of being a director, provided the director has not acted in bad faith,
dishonestly or unlawfully, and provided further that the director has not
received any "improper personal benefit"; and (2) that a corporation must
(unless otherwise provided in the corporation's charter or articles of
incorporation) indemnify a director who is successful on the merits in defending
a suit against him by reason of being a director for "reasonable expenses." The
statutory provisions are not exclusive; i.e., a corporation may provide greater
indemnification rights than those provided by statute.
Item 16. Exhibits.
Exhibit No.
- -----------
EX-99.1(a) Articles of Incorporation. (1)
EX-99.1(b) Articles Supplementary to Articles of
Incorporation. (1)
48
<PAGE>
EX-99.1(c) Form of Articles of Amendment to Charter (filed
herewith as part of Exhibit A to Part A).
EX-99.2 By-laws. (1)
Exhibit No.
- -----------
EX-99.3 Inapplicable.
EX-99.4 Plan of Reorganization and Liquidation (filed
herewith as Exhibit A to Part A).
EX-99.5 Inapplicable.
EX-99.6 Investment Advisory Agreement between each fund
of the Registrant and ALIAC.
(2)
EX-99.7 Underwriting Agreement between the
Registrant and ALIAC. (2)
EX-99.8 Inapplicable.
EX-99.9(a) Custodian Agreement between the
Registrant and Brown Brothers Harriman &
Company (International Growth Portfolio).
(3)
EX-99.9(b) Custodian Agreement between the
Registrant and Brown Brothers Harriman &
Company (Asian Growth Portfolio). (3)
EX-99.9(c) Custodian Agreement between the
Registrant and Melon Bank, N.A. (1)
EX-99.9(d) Amendments to Custodian Agreement between
the Registrant and Melon Bank, N.A. (1)
EX-99.10 Rule 12b-1 Plan. (2)
EX-99.11(a) Opinion of Kramer, Levin, Naftalis &
Frankel as to the legality of the
securities being issued.(8)
EX-99.11(b) Opinion of Ballard, Spahr, Andrews &
Ingersoll as to the legality of the
securities being issued.(8)
EX-99.12 Opinion of Kramer, Levin, Naftalis &
Frankel as to tax consequences. (7)
EX-99.13 Inapplicable.
49
<PAGE>
EX-99.14 Consent of KPMG Peat Marwick. (8)
EX-99.15 Inapplicable.
EX-99.16 Powers of Attorney. (7)
EX-99.17(a) Form of Proxy Card. (8)
Exhibit No.
- -----------
EX-99.17(b) The Registrant's declaration to register
an indefinite number of shares pursuant
to Rule 24f-2 under the Investment
Company Act of 1940. (4)
EX-99.17(c) Prospectuses and Statement of Additional
Information of Aetna Series Fund, Inc. relating
to Aetna Growth Fund, including audited financial
statements as of October 31, 1995. (5)
- --------------
(1) Filed as an exhibit to the Registration Statement on Form N-1A of the
Registrant (File No. 33-85620) as filed electronically with the
Securities and Exchange Commission on June 28, 1995, accession number
0000950109-95-002522.
(2) Filed as an exhibit to Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of the Registrant (File No. 33-
41694) as filed electronically with the Securities and Exchange
Commission on November 17, 1995, accession number 0000950146-95-
000715.
(3) Filed as an exhibit to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A of the Registrant (File No. 33-
41694) as filed with the Securities and Exchange Commission on
September 2, 1994.
(4) Aetna Series Fund, Inc., has registered an indefinite number of its
securities under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. The Registrant
electronically filed its Rule 24f-2 Notice for its fiscal year ended
October 31, 1995 on December 29, 1995, accession number
0000950146-95-000852.
50
<PAGE>
(5) Incorporated herein by reference to Post- Effective Amendment No. 12
to the Registration Statement on Form N-1A of the Registrant (File No.
33-41694) as filed electronically with the Securities and Exchange
Commission on February 29, 1996, accession number 0000950146-96-
000337.
(6) Filed as an exhibit to the Registration Statement on Form N-14 of the
Registrant (File No. 333-05091) as filed electronically with the
Securities and Exchange Commission on June 3, 1996, accession number
0000922423-96- 000248.
(7) Filed as signature page with the Registration Statement on Form N-14
of the Registrant (File No. 333-05091) as filed electronically with
the Securities and Exchange Commission on June 3, 1996, accession
number 0000922423-96- 000248.
(8) Filed herewith.
51
<PAGE>
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act [17 CFR 230.145c], the reoffering prospectus will
contain the information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
52
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
caused this Pre-Effective Amendment to the Registration Statement to be signed
on its behalf in the City of Hartford and State of Connecticut, on the 26th day
of July, 1996.
AETNA SERIES FUND, INC.
(Registrant)
By: /s/ Shaun P. Mathews
--------------------
Shaun P. Mathews
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Shaun P. Mathews President and Director July 26, 1996
- --------------------- (Principal Executive Officer)
Shaun P. Mathews
/s/ J. Scott Fox Vice President and Treasurer July 26, 1996
- --------------------- (Principal Financial and
J. Scott Fox Accounting Officer)
* Morton Ehrlich Director July 26, 1996
- ---------------------
Morton Ehrlich
* Maria T. Fighetti Director July 26, 1996
- ---------------------
Maria T. Fighetti
* David L. Grove Director July 26, 1996
- ---------------------
David L. Grove
* Timothy A. Holt Director July 26, 1996
- ---------------------
Timothy A. Holt
* Daniel P. Kearney Director July 26, 1996
- ---------------------
Daniel P. Kearney
* Sidney Koch Director July 26, 1996
- ---------------------
Sidney Koch
* Corine T. Norgaard Director July 26, 1996
- ---------------------
Corine T. Norgaard
* Richard G. Scheide Director July 26, 1996
- ---------------------
Richard G. Scheide
*/s/Julie E. Rockmore
- ---------------------
Power of Attorney
53
<PAGE>
INDEX TO EXHIBITS
Exhibit Number
- --------------
99.11(a) Opinion of Kramer, Levin, Naftalis & Frankel as
to the legality of the securities being issued.
99.11(b) Opinion of Ballard, Spahr, Andrews & Ingersoll
as to the legality of the securities being
issued.
99.12 Opinion of Kramer, Levin, Naftalis & Frankel as to tax
consequences.
99.14 Consent of KPMG Peat Marwick LLP .
55
Kramer, Levin, Naftalis & Frankel
919 THIRD AVENUE
NEW YORK, N.Y. 10022-3852
(212) 715-9100
ARTHUR H. AUFSES III Richard Marlin Sherwin Kamin
THOMAS D. BALLIETT Thomas E. Molner Arthur B. Kramer
JAY G. BARIS Thomas H. Moreland Maurice N. Nessen
SAUL E. BURIAN Ellen R. Nadler Founding Partners
BARRY MICHAEL CASS Gary P. Naftali Counsel
THOMAS E. CONSTANCE Michael J. Nassa --------
MICHAEL J. DELL Michael S. Nelson Martin Balsam
KENNETH H. ECKSTEIN Jay A. Neveloff Joshua M. Berman
CHARLOTTE M. FISCHMAN Michael S.Oberman Jules Buchwald
DAVID S. FRANKEL Paul S. Pearlman Rudolph De Winter
MARVIN E. FRANKEL Susan J. Penry-Williams Meyer Eisenberg
ALAN R. FRIEDMAN Bruce Rabb Arthur D. Emil
CARL FRISCHLING Allan E. Reznick Maxwell M. Rabb
MARK J. HEADLEY Scott S. Rosenblum James Schreiber
ROBERT M. HELLER Michele D. Ross Counsel
PHILIP S. KAUFMAN Max J. Schwartz -------
PETER S. KOLEVZON Mark B. Segall M. Frances Buchinsky
KENNETH P. KOPELMAN Judith Singer Debora K. Grobman
MICHAEL PAUL KOROTKIN Howard A. Sobel Christian S. Herzeca
KEVIN B. LEBLANG Steven C. Todrys Pinchas Mendelson
DAVID P. LEVIN Jeffrey S. Trachtman Lynn R. Saidenberg
EZRA G. LEVIN D. Grant Vingoe Jonathan M. Wagner
LARRY M. LOEB Harold P. Weinberger Special Counsel
MONICA C. LORD E. Lisk Wyckoff, Jr. -------
FAX
(212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
July 26, 1996
Aetna Series Fund, Inc.
151 Farmington Avenue
Hartford, Connecticut 06410
Re: Registration Statement on Form N-14
-----------------------------------
Gentlemen:
Reference is made to the Registration Statement on Form N-14 under the
Securities Act of 1933, as amended (the "Registration Statement"), to be filed
with the Securities and Exchange Commission (the "Commission") to register
shares of common stock, par value $.001 (the "Shares") of Aetna Series Fund,
Inc. (the "Company"), a Maryland corporation. The Shares are to be issued in
connection with an Agreement and Plan of Reorganization and Liquidation (the
"Agreement") whereby all of the then-existing assets of Aetna Asian Growth Fund
(the "Asian Growth Fund"), a series of the Company will be transferred to the
Aetna International Growth Fund (the "International Growth Fund"), another
series of the Company, in exchange for (i) the assumption of all the obligations
and stated liabilities of the Asian Growth Fund and (ii) the issuance and
delivery to each class of the Asian Growth Fund of full and fractional shares of
each corresponding class of the International Growth Fund's Shares (as described
in the Agreement); such Shares will be distributed by the Asian Growth Fund pro
rata to its shareholders upon its liquidation. For purposes of Maryland law, the
reorganization will be effected through a reclassification of shares of each
class of the Asian Growth Fund as Shares of the corresponding class of the
International Growth Fund. The Agreement was approved by the Board of Directors
of the
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Aetna Series Fund, Inc.
July 3, 1996
Page 2
Company on September 29, 1995, and is to become effective as soon as practicable
after its approval by shareholders of the Asian Growth Fund.
We have reviewed the Articles of Incorporation of the Company, its By-Laws,
resolutions of the Directors of the Company, and the Registration Statement
(including exhibits thereto). We have also made such inquiries and have examined
originals, certified copies or copies otherwise identified to our satisfaction
of such documents, records and other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. For purposes of such examination,
we have assumed the genuineness of all signatures on original documents and the
conformity to the original documents of all copies submitted. In addition, we
have assumed that the representations to be made as of the closing date by the
Company will be made by such parties in form acceptable to us and that the
Company's activities in connections with the Agreement and the transactions
contemplated therein have been and will be conducted in the manner provided in
such documents and as set forth herein.
The opinions expressed herein are limited to matters of law which govern
the due organization of the Company and the authorization and issuance of the
Shares. We are members of the Bar of the State of New York and do not hold
ourselves out as experts as to the law of any other state or jurisdiction. As to
matters of Maryland law, we have relied upon the opinion of Ballard Spahr
Andrews & Ingersoll. Based upon and subject to the foregoing and provided that
the terms of reorganization occur in accordance with the terms of the Agreement,
we are of the opinion that, and so advise you as follows:
(1) The Fund is duly incorporated and validly existing as a corporation in
good standing under the laws of the State of Maryland; and
(2) The Shares have been duly authorized for issuance by all necessary
corporate action on the part of Company and, when issued and delivered in
exchange for, and conversion and reclassification from, validly issued shares of
the Aetna Asian Growth Fund series of stock of the Fund, as contemplated by the
Registration Statement, will be validly issued, fully paid and nonassessable.
This opinion is solely for your information and is not to be quoted in
whole or in part, summarized or otherwise referred to, nor is it to be filed
with or supplied to or relied upon by any governmental agency or other person
without the prior written consent of this firm. This opinion is as of the date
hereof. We disclaim any responsibility to update or supplement this opinion to
reflect any events or state of facts which may hereafter come to our attention,
or any changes in statutes or regulations or any court decisions which may
hereafter occur.
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Aetna Series Fund, Inc.
July 3, 1996
Page 3
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
July 26, 1996
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Re: Aetna Series Fund, Inc., a Maryland corporation (the "Fund") - Registration
Statement on Form N- 14 pertaining to up to an aggregate amount of 20,000,000 of
the Class A shares of the Aetna International Growth Fund series of stock of the
Fund, par value $0.001 per share, and the Class B shares of the Aetna
International Growth Fund series of stock of the Fund, par value $0.001 per
share (collectively the "Shares")
Ladies and Gentlemen:
In connection with the registration of the Shares under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, by the
Fund on Form N-14 filed or to be filed with the Securities and Exchange
Commission (the "Registration Statement"), you have requested our opinion to the
matters set forth below.
We have acted as special Maryland corporate counsel for the Fund in
connection with the matters described herein. In our capacity as special
Maryland corporate counsel to the Fund, we have reviewed and are familiar with
certain proceedings taken by the Fund in connection with the authorization of
the Shares. In addition, we have relied upon certificates and advice from the
officers of the Fund upon which we believe we are justified in relying and on
various certificates from, and documents recorded with, the State Department of
Assessments and Taxation of Maryland (the "Department") including the charter of
the Fund ("Charter"), consisting of Articles of Incorporation of the Fund filed
with the Department on or about June 17, 1994 and Articles Supplementary filed
with the Department on or about September 27, 1993, November 1, 1993 and
September 27, 1994 and resolutions of the Board of Directors adopted on or
before the date hereof and in full force and effect on the date hereof; and such
laws, records, documents, certificates, opinions and instruments as we deem
necessary to render this opinion.
We have assumed the genuineness of all signatures and the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as certified, photostatic or conformed copies.
We have also assumed that each person executing any instrument, document or
certificate referred to herein on behalf of any party is duly authorized to do
so, and that except for the Shares, the Fund has not reserved, authorized for
issuance or issued more than 70,000,000 Class A shares of the Aetna
International Growth Fund series of stock of the Fund and not more than
70,000,000 Class B shares of the Aetna International Growth Fund series of stock
of the Fund.
<PAGE>
Based upon the foregoing and subject to the assumptions and qualifications
set forth herein, it is our opinion that, as of the date of this letter:
(1) The Fund is duly incorporated and validly existing as a corporation in
good standing under the laws of the State of Maryland; and
(2) The Shares have been duly authorized for issuance by all necessary
corporate action on the part of Company and, when issued and delivered in
exchange for, and conversion and reclassification from, validly issued shares of
the Aetna Asian Growth Fund series of stock of the Fund, as contemplated by the
Registration Statement, will be validly issued, fully paid and nonassessable.
The opinions set forth herein are limited to the current corporate laws of
the State of Maryland and we express no opinion with respect to laws of any
other jurisdiction or with respect to laws of the State of Maryland other than
corporate laws. Furthermore, the opinions presented in this letter are limited
to the matters specifically set forth herein and no other opinion shall be
inferred beyond the matters expressly stated.
We understand that you will be delivering an opinion to the Fund as to,
among other things, the legality of the Shares, which opinion will be filed as
an exhibit to the Registration Statement. This opinion letter is solely for your
use in connection with the delivery of your opinion to the Fund, and we consent
to the inclusion of this opinion, with your opinion to the Fund, as an exhibit
to the Registration Statement. This opinion letter may not be relied upon by any
other person, or by you for any other purpose, without our prior written
consent.
Very truly yours,
/s/Ballard Spahr Andrews & Ingersoll
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
ARTHUR H. AUFSES III Richard Marlin Sherwin Kamin
THOMAS D. BALLIETT Thomas E. Molner Arthur B. Kramer
JAY G. BARIS Thomas H. Moreland Maurice N. Nessen
SAUL E. BURIAN Ellen R. Nadler Founding Partners
BARRY MICHAEL CASS Gary P. Naftali Counsel
THOMAS E. CONSTANCE Michael J. Nassa --------
MICHAEL J. DELL Michael S. Nelson Martin Balsam
KENNETH H. ECKSTEIN Jay A. Neveloff Joshua M. Berman
CHARLOTTE M. FISCHMAN Michael S.Oberman Jules Buchwald
DAVID S. FRANKEL Paul S. Pearlman Rudolph De Winter
MARVIN E. FRANKEL Susan J. Penry-Williams Meyer Eisenberg
ALAN R. FRIEDMAN Bruce Rabb Arthur D. Emil
CARL FRISCHLING Allan E. Reznick Maxwell M. Rabb
MARK J. HEADLEY Scott S. Rosenblum James Schreiber
ROBERT M. HELLER Michele D. Ross Counsel
PHILIP S. KAUFMAN Max J. Schwartz -------
PETER S. KOLEVZON Mark B. Segall M. Frances Buchinsky
KENNETH P. KOPELMAN Judith Singer Debora K. Grobman
MICHAEL PAUL KOROTKIN Howard A. Sobel Christian S. Herzeca
KEVIN B. LEBLANG Steven C. Todrys Pinchas Mendelson
DAVID P. LEVIN Jeffrey S. Trachtman Lynn R. Saidenberg
EZRA G. LEVIN D. Grant Vingoe Jonathan M. Wagner
LARRY M. LOEB Harold P. Weinberger Special Counsel
MONICA C. LORD E. Lisk Wyckoff, Jr. -------
FAX
(212) 715-8000
---
WRITER'S DIRECT NUMBER
(212)715-9100
-------------
July 26, 1996
Aetna Series Fund, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
Ladies and Gentlemen:
We have acted as counsel to the Aetna Series Fund, Inc., a Maryland
corporation (the "Company"), in connection with the planned transfer by the
Aetna Asian Growth Fund, a series of the Company, of substantially all of its
assets to the Aetna International Growth Fund, a series of the Company, solely
in exchange for Aetna International Growth Fund voting stock and the assumption
by the Aetna International Growth Fund of certain stated liabilities of the
Aetna Asian Growth Fund, followed by the distribution by the Aetna Asian Growth
Fund of such Aetna International Growth Fund stock pro rata to its shareholders
in exchange for their Aetna Asian Growth Fund stock in complete liquidation of
the Aetna Asian Growth Fund (the "Reorganization") pursuant to the Agreement and
Plan of Reorganization and Liquidation approved by the Board of Directors of the
Company on September 29, 1995 (the "Reorganization Agreement").
The opinions expressed in this letter are based solely upon current law,
including the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury Regulations promulgated or proposed thereunder, current positions of
the Internal Revenue Service (the "IRS") contained in published Revenue Rulings
and Revenue Procedures, other current administrative positions of the IRS, and
existing judicial decisions, all of which are subject to change or modification
at any time, and any such changes or modifications could apply retroactively. No
ruling has been (or will be) sought from the IRS by the Company, the Aetna Asian
Growth Fund, or the Aetna International Growth Fund as to the federal
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Aetna Series Fund, Inc.
July 26, 1996
Page 2
income tax consequences of any aspect of the Reorganization. There can be no
assurance that the IRS or a court of competent jurisdiction will not disagree
with the opinions expressed herein. Any inaccuracy in, or breach of, any the
representations or assumptions set forth below or any change after the date
hereof in applicable law could adversely affect our opinion. We do not
undertake, and hereby disclaim any obligation, to advise you of any changes in
any matters on which the opinions set forth herein are based.
For purposes of the opinions set forth below, we have reviewed and relied
upon (i) the Reorganization Agreement, (ii) the most recent audited financial
statements of the Aetna Asian Growth Fund, and (iii) such other documents,
records, and instruments as we have deemed necessary or appropriate as a basis
for our opinion. In addition, in rendering our opinion we have assumed that at
the time of the Reorganization we will receive representations from the Aetna
Asian Growth Fund, the Aetna International Growth Fund, Aetna Life Insurance and
Annuity Company (both in its capacity as investment adviser to the Aetna Asian
Growth Fund and the Aetna International Growth Fund and in its capacity as a
five-percent (5%) shareholder) and the Aetna Life Insurance Company, which
representations will be satisfactory, in form and substance, to us and which we
will neither investigate nor verify. Also, we have assumed that (i) at all
relevant times, the Aetna Asian Growth Fund and the Aetna International Growth
Fund will continue to be operated as regulated investment companies within the
meaning of Subchapter M of the Code; (ii) all documents we have reviewed are
true and accurate, accurately reflect the originals, and have been properly
executed; and (iii) the activities of the Aetna Asian Growth Fund and the Aetna
International Growth Fund in connection with the Reorganization Agreement and
the transactions contemplated therein have been and will be conducted in the
manner provided in such documents and as set forth herein. Furthermore, we have
assumed that (i) all representations which are made "to the best knowledge" of
any person will be true, correct, and complete as if made without such
qualification; (ii) the Reorganization will be consummated substantially in
accordance with the Reorganization Agreement; and (iii) there are no
shareholders that will directly own, at the time of the Reorganization, more
than five percent (5%) of the shares of the Aetna Asian Growth Fund, other than
the Aetna Life Insurance and Annuity Company and the Aetna Life Insurance
Company.
Based on and subject to the foregoing, we are of the opinion that:
(1) Pursuant to Code section 851(h)(1), the Aetna Asian Growth Fund and the
Aetna International Growth Fund will each be treated as a separate corporation
for federal income tax purposes;
(2) The exchange by the Aetna Asian Growth Fund of substantially all of its
assets in exchange for shares of the Aetna International Growth Fund and the
assumption
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Aetna Series Fund, Inc.
July 26, 1996
Page 3
by the Aetna International Growth Fund of certain stated liabilities of the
Aetna Asian Growth Fund, and the subsequent liquidation of the Aetna Asian
Growth Fund pursuant to the Reorganization Agreement will constitute a
reorganization within the meaning of Code section 368(a)(l)(C) and the Aetna
Asian Growth Fund and the Aetna International Growth Fund will each be "a party
to a reorganization" within the meaning of Code section 368(b);
(3) Pursuant to Code sections 357(a) and 361(a) and (c), the Aetna Asian
Growth Fund will not recognize any gain or loss as a result of the
Reorganization;
(4) Pursuant to Code section 1032(a), the Aetna International Growth Fund
will not recognize any gain or loss on the receipt of the assets of the Aetna
Asian Growth Fund in exchange for shares of the Aetna International Growth Fund;
(5) Pursuant to Code section 354(a)(1), the shareholders of the Aetna Asian
Growth Fund will not recognize any gain or loss on the exchange of their shares
of the Aetna Asian Growth Fund for shares of the Aetna International Growth
Fund;
(6) Pursuant to Code section 358(a)(1), the aggregate tax basis of shares
of the Aetna International Growth Fund received by each shareholder of the Aetna
Asian Growth Fund will be the same as the aggregate tax basis of the shares of
the Aetna Asian Growth Fund exchanged therefor;
(7) Pursuant to Code section 362(b), the Aetna International Growth Fund's
adjusted tax bases in the assets received from the Aetna Asian Growth Fund in
the Reorganization will be the same as the adjusted tax bases of such assets in
the hands of the Aetna Asian Growth Fund immediately prior to the
Reorganization;
(8) Pursuant to Code section 1223(1), the holding period of each former
shareholder of the Aetna Asian Growth Fund in the shares of the Aetna
International Growth Fund received in the Reorganization will include the period
during which such shareholder held his shares of the Aetna Asian Growth Fund as
a capital asset; and
(9) Pursuant to Code section 1223(2), the Aetna International Growth Fund's
holding periods in the assets received from the Aetna Asian Growth Fund in the
Reorganization will include the holding periods of such assets in the hands of
the Aetna Asian Growth Fund immediately prior to the Reorganization.
No opinion is expressed as to any matter addressed in this letter other
than as set forth above.
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Aetna Series Fund, Inc.
July 26, 1996
Page 4
We are members of the bar of the State of New York and are not admitted to
practice law in any other jurisdiction. Accordingly, we express no opinion with
respect to the laws of any jurisdiction other than the federal law of the United
States in respect of the matters set forth herein.
We hereby consent to the filing of this opinion as an exhibit to the Joint
Proxy Statement/Prospectus on Form N-14 (the "Registration Statement") and the
reference to this firm under the caption "Federal Income Tax Consequences" in
the Joint Proxy Statement/Prospectus and in the Registration Statement. The
giving of this consent, however, does not constitute an admission that we are
"experts" within the meaning of Section 11 of the Securities Act of 1933, as
amended, or within the category of persons whose consent is required by Section
7 of said Act.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Aetna Series Fund, Inc.
We consent to the use of our report incorporated herein by reference, and to the
reference to our Firm under the heading "Financial Statements" in the Combined
Prospectus/proxy Statement
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
July 26, 1996
AETNA ASIAN GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 13, 1996
Please refer to the Proxy Statement for a discussion of these matters. THE
UNDERSIGNED HOLDER(S) OF SHARES OF STOCK OF THE AETNA ASIAN GROWTH FUND HEREBY
CONSTITUTES AND APPOINTS SHAUN P. MATHEWS AND SUSAN E. BRYANT, OR EITHER OF
THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF
SUBSTITUTION, TO VOTE THE SHARES LISTED BELOW AS DIRECTED, AND HEREBY REVOKES
ANY PRIOR PROXIES. To vote, mark an X in blue or black ink on the proxy card
below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AETNA
SERIES FUND, INC.
- -----Detach card at perforation and mail in postage paid envelope provided------
1. Vote on Proposal to approve a Plan of Reorganization and Charter Amendment
with respect to the Aetna Asian Growth Fund.
FOR AGAINST ABSTAIN
| | | | | |
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
- -----Detach card at perforation and mail in postage paid envelope provided------
AETNA SERIES FUND, INC.
AETNA ASIAN GROWTH FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF EACH PROPOSAL.
Please sign exactly as name appears on
this card. When account is joint
tenants, all should sign. When signing
as administrator, trustee or guardian,
please give title. If a corporation or
partnership, sign in entity's name and
by authorized person.
x_______________________________________
x_______________________________________
Dated:____________________________, 1996
<PAGE>
[PLEASE KEEP THIS OLD VERSION OF SCHEDULE 1]
<TABLE>
<CAPTION>
SCHEDULE 1
Pro Forma Schedule of Investments
As of April 30, 1996
(unaudited)
- -------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL INTERNATIONAL ASIAN GROWTH ASIAN PRO FORMA
COUNTRY GROWTH ASSETS GROWTH % ASSETS GROWTH % ASSETS PRO FORMA %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina 373,750 0.9% - 373,750 0.6%
Australia 634,414 2.3% - 926,157 1.4%
Austria 644,252 0.8% - 344,848 0.5%
Belgium 581,041 1.4% - 576,602 0.9%
Canada 1,295,715 3.2% - 1,295,666 2.0%
Denmark 849,471 2.1% - 849,471 1.3%
Finland 1,353,222 3.3% - 1,353,301 2.0%
France 1,697,373 4.2% - 1,697,357 2.6%
Germany 2,431,072 6.0% - 2,431,072 3.7%
Hong Kong 1,755,484 4.1% 8,661,606 34.1% 10,348,833 15.6%
Indonesia 1,062,191 3.1% 1,988,590 7.8% 3,265,582 4.9%
Ireland 311,584 0.7% - 305,176 0.5%
Italy 1,628,253 4.0% - 1,626,722 2.5%
Japan 10,475,321 26.9% - 10,977,851 16.6%
Korea 499,500 1.2% 1,327,578 5.2% 1,827,078 2.8%
Malaysia 1,182,744 2.9% 5,022,823 19.8% 6,205,567 9.4%
Mexico 497,375 1.2% - 497,375 0.8%
Netherlands 1,762,849 4.3% - 1,762,797 2.7%
Norway 1,294,804 3.2% - 1,294,792 2.0%
New Zealand - -
Philippines 641,051 1.6% 1,441,605 5.7% 2,082,656 3.1%
South Africa - - -
Singapore 879,807 1.6% 1,755,121 6.9% 2,420,128 3.7%
Spain 676,956 1.7% - 676,955 1.0%
Sweden 898,916 2.2% - 880,158 1.3%
Switzerland 909,195 2.2% - 909,195 1.4%
Taiwan 178,400 0.4% - 178,400 0.3%
Thailand 516,040 1.3% 3,816,471 15.0% 4,332,511 6.5%
United Kingdom 3,867,249 9.4% - 3,854,734 5.8%
Cash 1,154,036 2.8% 1,373,060 5.4% 2,527,096 3.8%
Total 40,814,103 100.0% 25,386,853 100.0% 66,200,956 100.0%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
All amounts indicated in U.S. Dollars.
